Mortgage Applications Up on Refinancings

NEW YORK – Mortgage application volumes grew 6.9% in the week ended April 13, as refinances rose and purchases fell, according to data from the Mortgage Bankers Association's (MBA) Weekly mortgage applications survey.

The refinance index surged 13.5% and the unadjusted purchase index plunged 10.4%.

The four-week moving average for the seasonally adjusted market index rose 1.60%. The four-week moving average for the seasonally adjusted purchase index slipped 0.52%, while the four-week moving average for the average refinance index gained 2.36%.

Refinances accounted for 75.2% of total applications, up from 70.5% the previous week. Adjustable-rate mortgages (ARM) were 5.3% of applications, off from 5.5% the week before.

"Renewed concerns about sovereign debt in Europe led to a drop in rates last week, with the 30-year rate tying our survey low, reached in early February.  Refinance activity picked up in response, increasing 13.5 percent for the week.  Participants in our survey indicated that about 32 percent of this refinance volume was for HARP loans," said Jay Brinkmann, MBA's Chief Economist and SVP of Research and Education. "While purchase activity declined sharply for the week, this was mostly due to a 23 percent drop in applications for FHA purchase loans.  This drop follows big increases in the demand for FHA loans over several weeks in anticipation of the FHA mortgage insurance premium increases that went into effect last week.  This was the largest weekly drop in the government purchase index since the expiration of the first-time homebuyer tax credit in May 2010.  The demand for conventional purchase loans was down only slightly."

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 4.05% from 4.10%.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.33% from 3.37%.