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Mortgage Applications Jump 4.9% from Week Earlier

Mortgage application volume leapt forward by 4.9 percent from the week earlier despite flailing numbers for purchase applications.

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The ""Mortgage Bankers Association"":http://www.mbaa.org/default.htm (MBA) released the _Weekly Mortgage Applications Survey_ for last week, with findings that include a seasonally adjusted 4.9-percent increase and an unadjusted 4.8-percent increase in terms of total mortgage application volume.

Speaking with _MReport_, ""Mike Fratantoni"":http://www.mbaa.org/files/SpeakersBureau/FrantantoniM.pdf, VP of research and economics with the MBA, chalks up the gains to two factors, which he says includes some uncertainty in terms of lenders that stayed open or closed on Columbus Holiday and still-low purchase application volume.

""People really are just very cautious in their attitudes toward homebuying,"" he tells _MReport_.

He says that tough underwriting and appraisal standards, coupled with low job growth, continue to discourage first-time and repeat homebuyers from entering an extremely affordable market, even when faced with rock-bottom mortgage rates and still-low home prices.

""The market fundamentals show that it does seem like a great time to buy, but we're not seeing any reaction at this point"" from homebuyers, he says.

The Purchase Index accordingly remained 2.7 percent beneath levels seen over the same time last year, even in lieu of seasonally adjusted 6.4-percent and unadjusted 6.1-percent increases for the Purchase Index.

Adjustable-rate mortgages (ARMs) fielded a 5.9-percent uptick, up from 5.8 percent of application volume from the

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week before, as the seasonally adjusted four-week moving average fell by 3.61 percent for the Market Index, 0.71 percent for the Purchase Index, and 4.41 percent for the Refinance Index.

Purchase applications among investors went up a few notches from 5.7 percent in August to 6 percent, with application volume from the nation's Mountain region behind much of the upswing.

Meanwhile, contract interest rates remained largely unchanged for 30-year and 15-year fixed-rate mortgages, with those for the former staying static at 4.33 percent and others for the latter climbing to 3.62 percent from 3.61 percent.

Interest rates for 30-year loans guaranteed by the ""Federal Housing Administration"":http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/fhahistory and those with jumbo loan balances fell to 4.11 percent and increased to 4.68 percent from 4.12 percent and 4.64 percent, respectively.

Among 5-year and 1-year ARMs, the contract interest rate went up to 3.11 percent on average, up from 3.08 percent from the week earlier.

The MBA's Refinance Index also shot up by 4.4 percent from the week before, with the overall share of refinancing activity in the markets on a shortfall to 77.3 percent, down from 77.6 percent from the week before.

Asked what modifications for the Home Affordable Refinance Program will mean for refinancing activity into the future, Fratantoni says that the MBA forecasts $20 billion in refinance activity per quarter over the next few years.

""It won't move the needle a lot,"" he adds. ""It will help 800,000 homeowners or so, but I really don't see a huge impact for the market as a result.""

And whither mortgage application volume in the near future?

Fratantoni says that the MBA's forecast sees ""purchase originations roughtly flat into 2012, then picking up substantially in 2013,"" keeping in line with an earlier forecast from the trade group that predicts $900 billion in mortgage originations over next year.

He adds that refinance application volume will trend upward over the first half of 2012 but taper off quickly.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.
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