WASHINGTON – Mortgage applications nationwide rose last week as applications from homebuyers increased for the first time in three weeks and refinancing applications continued to climb, the Mortgage Bankers Association announced today.
The MBA’s overall Market Composite Index – a measure of mortgage loan application volume – rose to 652.0 points in the week ended Oct. 5, a seasonally adjusted increase of 2.4 percent from the week before and 8.6 percent from the same week a year ago.
The group’s seasonally adjusted Refinance Index rose 2.7 percent last week to 2003.2 points, while the Purchase Index rose 2.1 percent to 401.9.
Refinancing accounted for 46.2 percent of loan applications last week, up from 46.0 percent the previous week. Adjustable-rate mortgage activity fell to 13.6 percent of applications from 13.8 percent the week before.
Interest rates were mixed, with the average 30-year fixed-rage mortgage costing borrowers 6.40 percent, up from the previous week’s 6.32 percent, while the average one-year ARM went for 6.15 percent, down from 6.21 percent the week before.
“Weak actual home sales and high inventories of unsold new homes suggest that home construction will continue to be a significant drag on overall economic activity,” Steven Wood, president of Insight Economics LLC in Danville, Calif., told Bloomberg News.
In a separate report today, the MBA said mortgage industry profits fell last year, to a negative $50 per loan in 2006 from a positive $258 per loan in 2005.
The average firm posted pre-tax net financial income of $6.4 million in 2006, compared with $26 million in 2005, the study report said. Retail sales productivity averaged 62 loans per loan officer in 2006, down from 83 per loan officer in 2005. Average servicing profit per loan fell to $58 in 2006, from $104 per loan in 2005.
“Production profits began to slip in 2004, and we see a continuation of this trend in 2006,” Marina Walsh, a senior director in the MBA’s research and economics department, said in a statement.
“Despite some companies’ best efforts to boost production revenues through the origination of higher-yielding mortgage products, several factors worked against the industry as a whole: the negative yield curve, which increased the cost of funds; lower sales productivity; and higher per-loan sales and fulfillment costs, particularly personnel-related costs,” she said.
The Mortgage Bankers Association, a trade group representing the real estate finance industry, has 3,000 member companies that include mortgage firms, commercial banks, thrifts, life insurance companies and others. Additional information, including the MBA’s Weekly Application Survey, is available at www.mortgagebankers.org.
