Mortgage Applications Increase Modestly as FHA Interest Surges

Underscoring the new-found market presence for FHA-insured mortgages, a weekly report of mortgage application activity showed that borrowers continued to flock to government loans last week. A widely-watched composite index of overall mortgage application activity rose 5.4 percent to 725.6 for the week ending April 4, according to data released Wednesday morning by the Mortgage Bankers Association. The index was up 10.9 percent compared with the same week one year ago, the trade group said. The application index is calibrated to March 16, 1990; a reading of 725.6 means that application activity was roughly 7.3 times greater than when the index was first established. Both purchase and refinance activity rebounded after a previous drop one week earlier, the MBA said, with a refinance index rising 3.4 percent and a purchase index rising 8.1 percent. Mortgage rates increased modestly, according to data compiled by the trade group; widely-watched rate surveys from both Freddie Mac and Bankrate.com will be released tomorrow. A government index of application activity, largely tracking to FHA applications, surged 15.2 percent for the week as well. Interest in FHA loans has surged as the government-sponsored agency continues to offer mortgage programs that others do not; many private lenders have pulled back dramatically from offering credit in high loan-to-value scenarios. Mortgage activity decreased to 52.2 percent of total applications from 53.4 percent the previous week, the MBA said; ARM share of activity increased to 6.5 from 5.4 percent of total applications from the previous week. For more information, visit http://www.mortgagebankers.org.