December 15 2010 (Chris Moore)

The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending December 10, 2010. The Market Composite Index, a measure of mortgage loan application volume, decreased 2.3 percent on a seasonally adjusted basis from last week.

On an unadjusted basis, the Index increased 2.7 percent compared with the previous week. The four week moving average for the seasonally adjusted Market Index is down 4.7 percent.

The seasonally adjusted Purchase Index decreased 5.0 percent from one week earlier. The four week moving average is up 2.6 percent for the seasonally adjusted Purchase Index. The unadjusted Purchase Index decreased 8.6 percent compared with the previous week and was16.6 percent lower than the same week one year ago.

The Refinance Index decreased 0.7 percent from the previous week and is the lowest Refinance Index observed since the end of June. This is the fifth straight week that the Refinance Index has declined. The four week moving average is down 6.8 percent.

Michael Fratantoni, MBA’s Vice President of Research and Economics said, “Treasury rates increased last week following news that lower tax rates could be extended for another two years, boosting growth prospects. With this move, mortgage rates reached their highest level in more than six months. Not surprisingly, with rates up more than half a percentage point over the past month, refinance activity has declined sharply. Home purchase applications dropped this week following three weeks of increases, but remain near levels last seen in early May.”

The refinance share of mortgage activity increased to 76.7 percent of total applications from 75.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.5 percent from 5.6 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages increased to 4.84 percent from 4.66 percent, with points increasing to 1.34 from 0.94 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the fifth consecutive week that the average contract interest rate has increased and is the highest since the beginning of May 2010. The effective rate also increased from last week.

The average contract interest rate for 15-year fixed-rate increased to 4.21 percent from 3.98 percent last week, with points increasing to 1.28 from 0.97 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week. This is the third week in a row that the average contract rate has increased and it is at the highest level since early June 2010.

Tags: MBA, home purchase applications, mortgage rates, fixed rate mortgage, adjustable rate mortgage, refinance, interest rate