WASHINGTON – Mortgage applications nationwide surged last week as rates on fixed-interest loans declined, the Mortgage Bankers Association reported today.
In the seven days ended Jan. 4, the trade group’s Market Composite Index – a measure of mortgage loan application volume – rose 32.2 percent from the previous week’s level to a seasonally adjusted 533.9 points, after falling 8.2 percent in the week ended Dec. 28. Compared with the first week of 2007, the index rose 8.7 percent.
The increase was led by a 53.9-percent increase in refinancing that pushed the MBA’s seasonally adjusted Refinance Index to 2,494.2 points, erasing the previous week’s 8.5-percent decline. The Purchase Index rose 14.7 percent to 414.0 points, after falling 7.8 percent the week ended Dec. 28.
Refinancing accounted for 57.7 percent of loan applications last week, from the previous week’s 50.9 percent. Adjustable-rate mortgages (ARMs) decreased to 9.3 percent of total applications from 9.8 percent in the week ended Dec. 28.
Interest rates were mixed, with the rate on the average 30-year fixed-rate mortgage falling to 5.73 percent – the lowest level in two years – from the previous week’s 6.05 percent, while the rate on the average one-year ARM increased to 6.04 percent from the previous week’s 6.00 percent.
“These numbers can be a little misleading at the end of the year,” Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, told Bloomberg News. Figures often are volatile during the holiday season.
And analysts noted that the MBA survey measures only the number of applications, not the number of loans granted. Right now, with lenders tightening their standards, “Potential home buyers and refinancers are submitting multiple applications in order to secure financing, because of the turmoil in the mortgage markets,” said Steven Wood, president of Insight Economics in Danville, Calif.
The Mortgage Bankers Association, based in Washington, D.C., is a trade group representing the real estate finance industry. Its 3,000 member companies 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.
