In a weekly survey released Wednesday, the ""Mortgage Bankers Association"":http://www.mbaa.org/default.htm (MBA) revealed a 7.1 percent swell in mortgage applications from one week earlier, partly in response to declining mortgage rates.
[IMAGE]According to the Market Composite Index, which measures total mortgage loan application volume, numbers went up 7.1 percent on a seasonally adjusted basis, increasing at nearly the same percent on an unadjusted basis. From the previous week, the Refinance Index shot up 7.8 percent, alongside updrafts in the Purchase Index by 5.1 percent and 5.2 percent on a seasonally adjusted basis and unadjusted basis, respectively. The same indices reflected a total 5.9 percent increase from the same period one year ago.
In a ""statement"":http://www.mbaa.org/NewsandMedia/PressCenter/77504.htm, Michael Fratatoni, MBA's VP of research and economics, ascribed the 7.1 percent increase in treasury rates that ""plummeted more than 20 basis points last week as all eyes were focused on the debt ceiling negotiations in Washington, and economic data depicted much slower than anticipated economic growth.
""Mortgage rates fell, with the rate on 15-year mortgages reaching a new low in our survey. Refinance application volume increased, but even though 30-year mortgage rates are back below 4.5 percent, the refinance index is still almost 30 percent below last year's level,"" he said.
[COLUMN_BREAK]""Factors such as negative equity and a weak job market continue to constrain borrowers. Purchase activity increased off of a low base, returning to levels of one month ago, but remains weak by historical standards,"" Fratatoni added.
Speaking to _MReport_, the MBA executive ascribes the jump in rates to a boost in refinance activity.
""Rates have come down the past few weeks for a number of reasons, more of them related to the successful completion of the debt deal negotiations,"" he says. ""Rates primarily came down as a result of the refinance activity.""
According to the survey, the four-week moving average spiked by 2.8 percent for the Market Index on a seasonally adjusted basis, while the four-week moving average fell 0.4 percent for the Purchase Index. The average went up 4.2 percent for the Refinance Index. Adjustable-rate mortgages followed an updraft to 6.6 percent from 6.1 percent in total applications, while total applications, lingering at 69.6 percent from the previous week, jumped to 70.1 percent of total applications.
Average contract interest rates for fixed-rate mortgages in the 30-year category dropped from 4.57 percent to 4.45 percent, showing some sign of relative health in contrast with the 15-year, the contract and effective rates for which hit a new low not seen in two decades. The 15-year fixed-rate mortgage declined from 3.67 percent to 3.52 percent.
Asked to explain the 15-year fixed-rate mortgage drop and its implications for housing at large, Fratatoni adds, ""We're starting to see some stabilization. We're still seeing a very weak job market. We're down 7 million jobs relative to the peak of the job market nationally. That's the main factor holding back the housing sector right now.
""You're not going to get more homebuyers until you have more people with steady paychecks,"" he says.