by Calculated Risk on 12/06/2006 12:24:00 AM

The Mortgage Bankers Association (MBA) reports: Rates Fall and Mortgage Applications Rise In Latest Survey

Click on graph for larger image.

The Market Composite Index, a measure of mortgage loan application volume, was 647.6, an increase of 8.1 percent on a seasonally adjusted basis from 599 one week earlier. On an unadjusted basis, the Index increased 52 percent compared with the previous week and was up 1.9 percent compared with the same week one year earlier.

The seasonally adjusted Refinance Index increased by 13.7 percent to 1989.7 from 1749.6 the previous week and the Purchase Index increased by 4.9 percent to 426.6 from 406.7 one week earlier.

Mortgage rates declined:

The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.98 from 6.13 percent ...

The average contract interest rate for one-year ARMs decreased to 5.79 percent from 5.87 ...

The second graph shows the Purchase Index and the 4 and 12 week moving averages since January 2002. The four week moving average is up 1.5 percent to 411.9 from 405.8 for the Purchase Index.

The refinance share of mortgage activity increased to 50.1 percent of total applications from 46.9 percent the previous week. The refinance share is at its highest level since April 2004. The adjustable-rate mortgage (ARM) share of activity decreased to 23.9 from 24.5 percent of total applications from the previous week. The ARM share is at its lowest level since October 2003.

The third graph shows the MBA purchase index since 1990. There has been a clear uptrend in recent weeks. The purchase index is about 14% below the comparable week in 2005.

With the dramatic drop in the ten year yield (4.44% today), the 30 year mortgage has once again fallen under 6%. Based on Freddie Mac's monthly data, this is the first time the 30 year rate has been below 6% since September 2005.