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MBA Announces Loan Applications Declined From Prior Week Despite Record Low Mortgage Rates, Now At +0.6% From +1.3%

Tyler Durden's picture




 

The Mortgage Bankers Association released its weekly numbers and the Market Composite Index, a measure of mortgage loan application volume, was up 0.6% from a week before. Yet despite mortgage rates hitting all time record lows, this number was a reduction from the previous mortgage application change of +1.3%. As the press release announced: "The average contract interest rate for 30-year fixed-rate mortgages
decreased to 4.57 percent from 4.60 percent, with points decreasing to
0.89 from 0.93 (including the origination fee) for 80 percent
loan-to-value (LTV) ratio loans.  This was the lowest 30-year contract
rate ever recorded in the survey. The effective rate also decreased from
last week." In other words, the Fed's ongoing push to lower the 10 Year rate, and this the 30 Year fixed cash mortgage, will be an abysmal failure as we have reached the point where no matter what the actual rate on the mortgage is, marginal refinancing activity is now nearly flat, and soon likely to actually be negative. The Fed has fired its last bullet in an attempt to stimulate home price appreciation and failed.

From the MBA:

Title:     Mortgage Applications Essentially Unchanged Despite Lowest Rates in MBA Weekly Survey
Source:     MBA
Date:     8/11/2010


WASHINGTON, D.C. (August 11, 2010) — The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending August 6, 2010.  The Market Composite Index, a measure of mortgage loan application volume, increased 0.6 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 0.4 percent compared with the previous week.

The Refinance Index increased 0.6 percent from the previous week and the seasonally adjusted Purchase Index increased 0.3 percent from one week earlier. The unadjusted Purchase Index decreased 0.3 percent compared with the previous week and was 34.1 percent lower than the same week one year ago.
 
The four week moving average for the seasonally adjusted Market Index is up 1.2 percent.  The four week moving average is up 1.8 percent for the seasonally adjusted Purchase Index, while this average is up 1.0 percent for the Refinance Index.

The refinance share of mortgage activity increased to 78.1 percent of total applications from 78.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.9 percent from 5.4 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.57 percent from 4.60 percent, with points decreasing to 0.89 from 0.93 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.  This was the lowest 30-year contract rate ever recorded in the survey. The effective rate also decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.95 percent from 4.03 percent, with points increasing to 1.08 from 1.01 (including the origination fee) for 80 percent LTV loans. This was the lowest 15-year contract rate ever recorded in the survey. The effective rate also decreased from last week.

The average contract interest rate for one-year ARMs decreased to 7.00 percent from 7.10 percent, with points increasing to 0.22 from 0.21 (including the origination fee) for 80 percent LTV loans.

 

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Wed, 08/11/2010 - 08:19 | 514856 cossack55
cossack55's picture

But don't they still have the "homes for all, homes for free" bullet.

Wed, 08/11/2010 - 08:56 | 514916 redarrow
redarrow's picture

If they fire that they will also be firing the dollar away as the reserve currency overnight.

Wed, 08/11/2010 - 08:23 | 514863 overmedicatedun...
overmedicatedundersexed's picture

only question for home owners under water..

how much fire insurance you got?

 

Wed, 08/11/2010 - 08:25 | 514866 LoneStarHog
LoneStarHog's picture

The Spin As Reported:  "The purchase index continues to show life, up 0.3 percent in the Aug. 6 week to extend a run of gains. The refinance index is also showing life, up 0.6 percent following a 1.3 percent gain in the prior week. Low rates are helping demand for both purchases and refinancing. The average 30-year rate fell three basis points in the week to 4.57 percent."

Wed, 08/11/2010 - 08:29 | 514868 jbc77
jbc77's picture

I'm just left wondering. Scratching my head. Was yesterday's Fed speak just to show they are doing something? Anything?

Obviously it doesn't matter how low rates are. Don't they know that? Are you serious?

If you don't have a job or you don't feel secure about your job a person of average intellignece is not going to take on a mortgage. Seems simple, doesn't it?

After all the lies, games, stealing, looting that I've witnessed over the last year I find myself actively rooting for the utter failure of the federal reserve. Might sound sick but these people deserve what I hope is coming to them. It's time that they find themselves in harms way instead of the people who work hard everyday, just trying to support their familes. It's time they feel our pain and I pray to God they get whats coming to them.

Wed, 08/11/2010 - 10:34 | 515126 MachoMan
MachoMan's picture

Be careful what you wish for.  The devil is in the details of your desires.  You could end the FED and the country could collapse and you might find yourself at the end of the whip.  Remember, the FED's job is already largely complete, the wealth gap having been created long ago.  The people that rise to fill the power vacuum will not be fickle mistresses, rather they will unilaterally dictate your life (much like our present government).

What you need to hope for is that we, acting through the government, stop the charade and claw back ill gotten gains.  This plan will need to be universally accepted throughout the world given the ultimate primary actors are inevitably multinational corporations/people.  In short, to provide any legitimacy to the FED's destruction, it has to be destroyed from within the system that created it and not lynched out in the street.  And, not only does the FED have to be abolished, but the primary actors benefiting therefrom (not even sure how you quantify the benefit) punished and any ill gotten gains returned.

The days of overpowering soldiers with numbers are over.  You are just cannon fodder in modern warfare.  I would not get into a pissing contest in a power vacuum with the federal government in dire straights.  You might find yourself at the wrong end of the gun barrel of a "security detail" for one of those more equal animals.

Wed, 08/11/2010 - 08:30 | 514869 jkruffin
jkruffin's picture

Is the FED plan part of the overall plan to do the auto-refi attempt I wonder?  Let's say Benny Boy pushes the 10yr down to 1% and the 30yr down to 3% or less even,  then the auto-refi plan takes place.  Could help some homeowners save some greenbacks each month.

Doesn't help those without a job though, which is the real situation to worry about. 

Glad I am 100% in PIMCO Total Return fund,  because it is about to soar, thanks to Benny Ho.

Wed, 08/11/2010 - 09:44 | 515007 RaymondKHessel
RaymondKHessel's picture

Yep. Been in PPTRX since the start of the year. Nice gains already.

Wed, 08/11/2010 - 08:32 | 514877 bonddude
bonddude's picture

My arm payments are @ -.5%-WOW

Wed, 08/11/2010 - 08:37 | 514883 bigkahuna
bigkahuna's picture

People who want to refi cannot. Those who can refi are busy deleveraging. It is that simple. Short of making a refi compulsory somehow, it's just not going to happen. Purchases are a non factor. Do these brilliant folks not understand a systematic issue when they see one?

Wed, 08/11/2010 - 08:41 | 514888 Internet Tough Guy
Internet Tough Guy's picture

I can refi, but I am waiting for the 10 yr to go 2.5.

Wed, 08/11/2010 - 09:52 | 515021 bigkahuna
bigkahuna's picture

Sounds like a good plan!

Wed, 08/11/2010 - 08:45 | 514894 Mako
Mako's picture

It's called game over.

You can only shove so much food down the fat man's pie hole before he vomits and implodes. 

http://www.youtube.com/watch?v=MlfcF1I5e_g

It's been over since 2007 but mass lemmings still think they can get out. 

Wed, 08/11/2010 - 09:38 | 514994 taraxias
taraxias's picture

Nice to have you back Mako. You hadn't posted for a while.

Wed, 08/11/2010 - 10:13 | 515065 ella
ella's picture

Prices are still way too high as compared to incomes and the increased cost of living. 

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