Mortgage Applications Fall as Refinancing Slows; Activity Scratches Yearly Low

Slowing refinancing applications activity from borrowers — troubled or otherwise — helped push the Mortgage Bankers Association’s weekly applications survey down for the week ended May 23, as mortgage rates headed upward last week. The MBA said Wednesday morning that its composite index of purchase and refinance activity fell 4.6 percent on seasonally-adjusted basis to 593.3; last week’s total was 7.5 percent below year ago application activity. Last week’s total was the slowest week since the end of April, when the index fell to 567.0, and was among the lowest application totals recorded this year. The application index is calibrated to March 16, 1990; a reading of 593.3 means that application activity was roughly 5.9 times greater than when the index was first established. Driving the drop was a fall-off in refinancing applications, which fell 8.9 percent from the previous week amid rising rates, the MBA said. Average rates on a traditional 30-year fixed-rate mortgage rose six basis points, while rates on one-year ARMs shot up an average of 21 basis points, according to the MBA’s calcuations. Despite the fall-off in refinancing, purchase applications actually increased 0.8 percent while the a measure of government purchase application activity — largely FHA — decreased 2.2 percent. FHA volume had been strong to start 2008, as borrowers piled into the revitalized government lending program, but has since tapered off. Not surprisingly, the refinance share of mortgage activity decreased to 46.1 percent of total applications from 48.2 percent the previous week, the MBA reported. ARM share decreased to 9.3 from 10.0 percent of total applications from the previous week. For more information, visit http://www.mortgagebankers.org.