By Mark Huffman
ConsumerAffairs.com
November 12, 2009
The number of
people taking mortgage loans went up slightly in the last week, but most
were refinancing existing mortgages. Loans for home purchases continued to
fall.
The Mortgage Bankers' Association Market Composite Index, a measure of mortgage loan application volume, increased 3.2 percent on a seasonally adjusted basis from one week earlier.
The Refinance Index was up 11.3 percent from the previous week but the seasonally adjusted Purchase Index decreased 11.7 percent from one week earlier, hitting its lowest point since December 2000.
Mortgages for home purchases fell 13.7 percent compared with the previous week and was 21.6 percent lower than the same week one year ago.
Low interest rates continue to attract homeowners who want to save money on their monthly payments. Some, who have been paying variable rates, are able to lock in a 30 year fixed-rate loan for around five percent. While that adds some stability to the housing market, it's not providing the boost a big increase in sales would.
When divided between new purchases and refinancing, the refinance share of mortgage activity increased to 71.5 percent of total applications from 66.1 percent the previous week. This refinance share is the highest share since May of this year, when the 30-year fixed-rate mortgage rate was around 4.7 percent, close to the historical low of the survey. The adjustable-rate mortgage share of activity decreased to 5.5 percent from 6.1 percent of total applications from the previous week.
Rates Still Falling
Meanwhile, rates are going lower still. The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.90 percent from 4.97 percent, with points increasing to 1.03 from 1.01 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The contract rate is the lowest observed in the survey since the week ending May 15th, 2009, when it was 4.69 percent.
The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 4.33 percent, with points decreasing to 1.15 from 1.33 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs increased to 6.85 percent from 6.83 percent, with points decreasing to 0.29 from 0.31 (including the origination fee) for 80 percent LTV loans.
