Reflecting a roiling stock market and an associated drop in mortgage rates, the Mortgage Bankers Association said today that mortgage applications jumped 7.3 percent last week on a seasonally-adjusted basis, compared to one week earlier. Applications increased 15.6 percent compared with the same week one year earlier. Refinancing activity drove the lion’s share of the increase, according to the MBA, increasing 15 percent from the previous week. Lower mortgage rates, driven by recent woes in U.S. stocks, have heated up prepayment speeds in recent weeks. The refinance share of mortgage activity increased as well, up to 46.1 percent of total applications from 43.2 percent the previous week, the MBA said. The adjustable-rate mortgage (ARM) share of activity increased to 21.4 from 21.1 percent of total applications from the previous week, reflecting that consumers still have interest in adjustable-rate loan products.
ARM loans have come under increasing fire from both consumer groups and regulators, who both say that such ‘creative’ loan products are driving current problems in the U.S. subprime mortgage markets. Refinancings weren’t the only loans generating heat in the past week, with conventional loan applications rising 7.7 percent and government-sponsored mortgages increasing 1.8 percent. The four week moving average for the seasonally-adjusted composite Market Index is up 1.7 percent to 636 from 625.6, the MBA said, marking the second time this year the moving average has reported a positive move. For more information, visit http://www.mortagebankers.org.
