Wednesday, September 08, 2010

MBA: Mortgage Purchase Activity increases slightly

by Bill McBride on 9/08/2010 07:32:00 AM

The MBA reports: Mortgage Purchase Applications Up, Refinance Applications Fall Slightly in Latest MBA Weekly Survey

The Refinance Index decreased 3.1 percent from the previous week. The seasonally adjusted Purchase Index increased 6.3 percent from one week earlier.
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“Purchase applications increased last week, reaching the highest level since the end of May. However, purchase activity remains well below levels seen prior to the expiration of the homebuyer tax credit, and is almost 40 percent below the level recorded one year ago,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “On the other hand, refinance volume dropped last week for the first time in six weeks, but the level of applications to refinance remains close to recent highs, as historically low mortgage rates continue to draw borrowers into the market.”
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The average contract interest rate for 30-year fixed-rate mortgages increased to 4.50 percent from 4.43 percent, with points decreasing to 0.96 from 1.34 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
MBA Purchase Index Click on graph for larger image in new window.

This graph shows the MBA Purchase Index and four week moving average since 1990.

As the MBA's Fratantoni noted, "purchase activity remains well below levels seen prior to the expiration of the homebuyer tax credit" and this suggests existing home sales in August, September and even October, will only be slightly higher than in July.