Mortgage Applications Hit Highest Levels in Over a Year

The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending December 8. The Market Composite Index, a measure of mortgage loan application volume, was 721.2, an increase of 11.4 percent on a seasonally adjusted basis from 647.6 one week earlier. On an unadjusted basis, the Index increased 10.2 percent compared with the previous week and was up 22.2 percent compared with the same week one year earlier. The Market Index is at its highest level since October 2005.

?The substantial decline in mortgage rates over the past six months, greater than 80 basis points in total, has led to a significant increase in refinance activity. Additionally, we are seeing a steady increase in purchase applications,? said Mike Fratantoni, Senior Economist at the Mortgage Bankers Association.

The seasonally adjusted Refinance Index increased by 15.8 percent to 2304.4 from 1989.7 the previous week and the Purchase Index increased by 8.7 percent to 463.8 from 426.6 one week earlier. The Refinance Index is at its highest level since September 2005 while the Purchase Index is at its highest since January 2006. The seasonally adjusted Conventional Index increased by 11.9 percent to 1079.4 from 964.7 the previous week, and the seasonally adjusted Government Index increased 4.3 percent to 124.1 from 119 the previous week. The four week moving average for the seasonally adjusted Market Index is up 2.9 percent to 647.9 from 629.4. The four week moving average is up 3.1 percent to 424.6 from 411.9 for the Purchase Index, while this average is up 3.7 percent to 1994.8 from 1924.2 for the Refinance Index.

The refinance share of mortgage activity increased to 52.6 percent of total applications from 50.1 percent the previous week. The refinance share is at its highest level since April 2004. The adjustable-rate mortgage (ARM) share of activity increased to 24.9 from 23.9 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages increased to 6.02 from 5.98 percent, with points increasing to 1 from 0.91 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 5.75 percent from 5.66 percent, with points decreasing to 1 from 1.01 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs decreased to 5.76 percent from 5.79, with points increasing to 0.81 from 0.77 (including the origination fee) for 80 percent LTV loans. The one year rate is at its lowest level since March 2006.