Refinance Applications Jump with Recent Drop in Rates

Mortgage Bankers Association of America ^ | November 26, 2003

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Refinance Applications Jump with Recent Drop in Rates

WASHINGTON , D.C. ( November 26, 2003 ) - The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending November 21. The Market Composite Index of mortgage loan applications - a measure of mortgage loan applications for purchases and refinancings - increased by 16.9 percent to 775.6 on a seasonally adjusted basis from 663.2 one week earlier. On an unadjusted basis, the Index increased by 28.1 percent compared with last week and was down 33.8 percent compared with the same week one year earlier.

The MBA seasonally adjusted Purchase Index increased by 8.0 percent to 459.9 from 425.9 the previous week. The seasonally adjusted Refinance Index increased by 27.8 percent to 2612.2 from 2043.9 one week earlier. Other seasonally adjusted index activity included the Conventional Index, which increased 17.0 percent to 1082.0 from 925.0 the previous week. The Government Index increased 16.8 percent to 264.2 from 226.2 the previous week.

"We have seen a fairly consistent drop in long-term fixed rates since Veterans Day. Borrowers responded last week with a sharp increase in refinance applications." said Jay Brinkmann, MBA's vice president of research and economics. "In addition, the seasonally adjusted index of the number of applications for mortgages to purchase homes was only slightly below the record set last May. The strong purchase market continues to be driven by an improving economy, more people working, and low interest rates."

The refinance share of mortgage activity increased to 53.3 percent of total applications, from 48.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 27.0 percent from 27.5 percent the previous week.

The average contract interest rate for 30-year fixed-rate mortgages increased to 5.73 percent from 5.64 percent one week earlier, with points decreasing to 1.45 from 1.54 the previous week (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 5.07 percent from 4.95 percent one week earlier, with points remaining at 1.41 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs increased to 3.59 percent from 3.49 percent one week earlier, with points increasing to 1.06 from 1.05 the previous week (including the origination fee) for 80 percent LTV loans.

**SPECIAL NOTES**

The survey covers approximately 40 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.

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