Mortgage Applications Rise as Rates Fall

Raw mortgage application activity ticked up 5.3% in the week ending April 17, according to a weekly survey released Wednesday by the Mortgage Bankers Association. The four-week moving average remained virtually unchanged, up 0.3% for the week, indicating overall seasonal application activity remains somewhat static. The volume of applications for refinance rose 7.7% while the four-week moving average of refi activity inched up 0.7%. The refi share of total mortgage applications rose to 79.7% in the week from 77.8% the previous week. The rate of decline in the index measuring purchase application slowed to 4.2% in the week, from 11.3% a week earlier. Conventional purchase application volume down 4.6% and government purchase application volume — think FHA-insured loan applications, here — down 3.6% for the week, according to the MBA. A separate survey, conducted by Mortgage Maxx LLC found that application activity adjusted for multiple applications from a single household rose 3% for the same week ending April 17, after falling 7.5% in the previous week. Household activity in California alone rose 6.4% after slipping 14.7% the week before, the study found. The Mortgage Application Index — or MAX — publisher Paul Descloux, in his weekly commentary on the index, said the weekly applications remain strong as mortgage rates hover near “what may be their  interim” lows. The demand on the Federal Reserve’s resources to influence lower mortgage rates may, however, prove more costly than widely believed, Descloux wrote. The most recent mortgage rate survey by Freddie Mac (FRE) showed 30-year fixed-rate mortgages averaged 4.82% with an average 0.6 point last week, down from the previous week’s 4.87% average, and far below the average last year at the same time — 5.88%. Last week’s 15-year fixed-rate mortgage hit an all-time low, averaging 4.48%, compared to 4.54% the week before and 5.4% a year ago at the same time, Freddie said. With lower rates come higher interest in purchase and refi mortgage loans, but Mortgage Maxx’s Descloux warned against undue optimism on refinance effectiveness. “Even though rates are attractive, and the six-week exhalation of the stock market is lifting spirits, the same impediments to purchase and refi applications remain in the trenches,” he wrote in his weekly commentary. “For both creditor and mortgagor asset valuation, credit qualifying, and the home sale multiplier remain tanked. And something else not mentioned nearly enough is the cost of refinancing. For many who are able the origination expense associated with monthly mortgage savings may not make overwhelming home economic sense.” Visit www.mbaa.org and www.mortgagemaxx.us for further details. Write to Diana Golobay at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.