Refinance Loan Apps Still Falling. Purchase Demand Hits 12 Year ...

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The Mortgage Bankers Association today released the Weekly Survey on Mortgage Application Activity for both the week ending December 25, 2009 and the week ending January 1, 2009.

The MBA survey covers over 50 percent of all US residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts.  The data gives economists a look into consumer demand for mortgage loans.  A rising trend of mortgage applications indicates an increase in home buying interest, a positive for the housing industry and economy as a whole.  Furthermore, in a low mortgage rate environment, such a trend implies consumers are seeking out lower monthly payments which can result in increased disposable income and therefore more money to spend on discretionary items or to pay down other debt.

In the last report released before the MBA went on holiday, seasonal distractions combined with rising mortgage rates had obvious effects on the motivation of prospective home buyers and fence sitting refinancees as loan application volume fell 10.7 percent.  The Refinance Index decreased 10.1 percent from the prior week and the seasonally adjusted Purchase Index decreased 11.6 percent. The refinance share of mortgage activity increased to 75.9 percent of total applications from 75.2 percent.

In today's release, which reported on the previous two weeks, holiday distractions and rising mortgage rates again had a negative effect on mortgage loan applications.

In the week ending December 25, 2009, loan application demand dropped 22.8 percent with the Refinance Index recording a 30.5 percent decline while the Purchase Index fell 4.0 percent. In the week ending January 1, 2010, mortgage applications rose by 0.5 percent thanks to a 3.6 percent increase in purchase loan apps, meanwhile the refinance index fell by 1.6 percent.

Both week's include an index adjustment to account for Christmas andrnNew Year's day market holidays....

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