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Mortgage Applications Inch Forward Amid Market Uncertainty

As mortgage rates rose, then fell on a debt deal in Europe, mortgage application volume also crept forward last week, with the uncertain economy and high unemployment forcing homeowners to stay on the sidelines.

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In releasing a weekly survey, the ""Mortgage Bankers Association"":http://mbaa.org/default.htm (MBA) found mortgage applications on a seasonally adjusted curve upward to 0.2 percent from the week before. Refinance activity fell on the whole as purchases, still near historic lows, remained overwhelmingly near bottom.

Speaking with _MReport_, ""Mike Fratantoni"":http://www.mbaa.org/files/SpeakersBureau/FrantantoniM.pdf, VP of research and economics with the trade group, calls the hot-cold switch-offs in mortgage rates ""some pretty wild swings"" that spurred a sense of caution among first-time and other potential borrowers.

""That's enough to make people nervous,"" he says. ""The turmoil in Europe is a real negative for the market right now.""

The MBA saw a 0.2-percent decline for the Refinance Index, alongside a seasonally adjusted 1.8-percent uptick for the Purchase Index from one week before. The latter

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also found a seasonally unadjusted 0.8-percent uptick in mortgage application volume.

The four-week moving average for the Market Index fell by 0.06 percent on a seasonally adjusted basis, according to the Purchase Index, even while the Refinance Index tumbled by 3.19 percent.

Despite an overhaul of the Home Affordable Refinance Program (HARP), refinance activity fell for mortgage application volume to 77.1 percent of the total, down from 77.3 percent seen last week. Conventional refinance loan volume declined from 84.1 percent from the week before to 83.8 percent last week as refinance activity for government loans shot up to 49.4 percent from 48.6 percent.

""Top quality borrowers who have the ability and interest to refinance have already done so as rates were lower,"" Fratantoni says. ""As rates picked up over the last few weeks, refi has fallen off.""

He forecasts that refinance activity will climb higher over the next few years as HARP modifications come into effect.

Reflecting the size of the investor selloff last week, contract interest rates for 30-year fixed-rate mortgages squeezed on average to hit 4.31 percent last week, down from 4.33 percent from the week before.

Those for the 15-year loan went up by a percentage point while interest rates for 5-year and 1-year adjustable-rate mortgages declined to 3.09 percent last week, down from 3.11 percent from earlier.

The final analysis?

Asked whether the Friday payroll report will send up mortgage application volume, Fratantoni says it could but that anything similar to increases from recent months will ""not be the growth we need.""

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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