by Calculated Risk on 8/30/2006 12:18:00 AM

The Mortgage Bankers Association (MBA) reports: Mortgage Applications Decline

Click on graph for larger image.

The Market Composite Index, a measure of mortgage loan application volume, was 556.5, a decrease of 0.9 percent on a seasonally adjusted basis from 561.5 one week earlier. On an unadjusted basis, the Index decreased 2.3 percent compared with the previous week and was down 22.4 percent compared with the same week one year earlier.

The seasonally-adjusted Purchase Index decreased by 1.6 percent to 375.9 from 382.2 the previous week and the Refinance Index increased slightly to 1609.2 from 1608.5 one week earlier. The Purchase Index is at its lowest level since November 2003. emphasis added

Mortgage rates increased slightly, after declining for the last several weeks:

The average contract interest rate for 30-year fixed-rate mortgages increased to 6.39 percent from 6.38 percent ...

The average contract interest rate for one-year ARMs increased to 5.97 percent from 5.91 percent ...

Change in mortgage applications from one year ago (from Dow Jones):

Total	-22.4%
Purchase	-19.2%
Refi	-26.4%
Fixed-Rate	-21.3%
ARM	-25.2%

Purchase activity continues to fall and is at 2003 levels. August 2006 purchase activity is off 21.7% compared to August 2005. Year-to-date purchase activity is off 12.9% compared to 2005 and appears to be getting worse.

Interest rates on a 30 year mortgage have fallen from a peak of 6.86%, just two months ago, to 6.38% last week. This has helped boost refinance activity in recent weeks.

The refinance share of mortgage activity increased to 41.5 percent of total applications from 40.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 26.8 percent of total applications from 26.4 percent the previous week.

It is possible that refinance activity will decline when the new Nontraditional Mortgage Guidance is released in the next couple of months.