Pleasanton Weekly

Real Estate - May 6, 2011

Survey shows mortgage applications decreasing

Higher FHA premiums causing slowdown

by Jeb Bing

Mortgage applications decreased 5.6% from one week earlier, according to data from the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending April 22. There was no adjustment made for Good Friday.

"Purchase applications fell last week, driven primarily by a sharp decrease in government purchase applications as new, higher FHA premiums went into effect," said Michael Fratantoni, MBA's Vice President of Research and Economics. "This decrease reverses a 20% increase in government purchase applications over a four-week period, which was likely driven by borrowers attempting to beat this deadline."

The Market Composite Index, a measure of mortgage loan application volume, decreased 5.6% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 5.6% compared with the previous week. The Refinance Index decreased 0.6% from the previous week. The seasonally adjusted Purchase Index decreased 13.6% to its lowest level since Feb. 25, 2011, driven by a 26.6% decrease in government purchase applications. The unadjusted Purchase Index decreased 12.8% compared with the previous week and was 28.8% lower than the same week one year ago.

The four week moving average for the seasonally adjusted market Index is down 2.4%. The four week moving average is down 0.8% for the seasonally adjusted Purchase Index, while this average is down 3.2% for the Refinance Index.

The refinance share of mortgage activity increased to 61.6% of total applications from 58.5% the previous week. This is the highest refinance share of the month. The adjustable-rate mortgage (ARM) share of activity remained unchanged from the previous week at 6.5% of total applications.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.80% from 4.83%, with points decreasing to 1.01 from 1.06 (including the origination fee) for 80% loan-to-value (LTV) ratio loans. The effective rate also decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.03% from 4.07%, with points decreasing to 0.96 from 1.02 (including the origination fee) for 80% LTV loans. The effective rate also decreased from last week.

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