by Calculated Risk on 8/26/2009 08:55:00 AM

The MBA reports:

The Market Composite Index, a measure of mortgage loan application volume, increased 7.5 percent on a seasonally adjusted basis from one week earlier.
...
The Refinance Index increased 12.7 percent from the previous week, the third increase in the last four weeks. The seasonally adjusted Purchase Index increased 1.0 percent from one week earlier ... This marks the fourth consecutive weekly gain – the first time this has happened since March, when fixed mortgage rates first dropped and stayed below 5 percent.
...
The average contract interest rate for 30-year fixed-rate mortgages increased to 5.24 percent from 5.15 percent ...

Click on graph for larger image in new window.

This graph shows the MBA Purchase Index and four week moving average since 2002.

Note: The increase in 2007 was due to the method used to construct the index: a combination of lender failures, and borrowers filing multiple applications pushed up the index in 2007, even though activity was actually declining.

Even though sales of existing homes are up recently, the purchase index has only increased slightly. First-time home buyers using FHA loans would be included in the composite purchase index (the government index is up strongly over the last year), however this disconnect between sales and the MBA purchase index might be because of all the cash buyers at the low end - an example, from DataQuick on Las Vegas:

Of all buyers, those using cash to purchase their homes accounted for nearly 43 percent of all sales in July, based on an analysis of public property records. Specifically, these were transactions where there was no indication of a purchase mortgage recorded at the time of sale. ... All-cash deals have become popular in many Western markets where prices have dropped sharply and sellers favor the relative speed and certainty of all-cash buyers.