Application Volume Rises, Favoring Refi

Raw mortgage application volume increased 15.8 percent on a seasonally adjusted basis for the week ending Jan. 9, according to the weekly survey released by the Mortgage Bankers Association. The four-week moving average of raw application volume increased 10.8 percent, suggesting a bit of recovery in the broader market. The MBA’s raw refinance application index increased 25.6 percent while its purchase index decreased 14.1 percent for the same week. The refi share of raw mortgage activity increased to 85.3 percent of total activity from 79.8 percent the previous week, emphasizing a continued influx of refi popularity. The MBA also reported some updated mortgage rates, which are creeping downward to the much-ballyhooed 4.5 percent that was rumored recently as a goal of the Treasury Department (secretary Henry Paulson publicly denied such a plan, but recent slashes in the federal funds rate might still trickle down to the everyday borrower). According to the MBA’s data, the average rate for 30-year fixed-rate mortgages decreased to 4.89 percent, “the lowest recorded in the survey.” The average rate for 15-year fixed-rate mortgages — a common refi product — decreased to 4.63 percent. The average rate for one-year adjustable-rate mortgages also showed a slight decrease, though it remains above the 5 percent mark at an average of 5.89 percent for the week ending Jan. 9. A separate application survey conducted by Mortgage Maxx LLC, which adjusts raw data to count multiple applications submitted by a single household as a single entry, found that household activity on the application level increased 2.2 percent for the week ending Jan. 9. The Mortgage Application Index for California — or MAXcal — also showed a statewide increase of 2.8 percent in household application activity. According to commentary from MAX publisher Paul Descloux, the 2008 year-end readings of strong mortgage demand were confirmed by the data from the first week of 2009, though the reaction to low mortgage rates was “average.” However, he warned that strong application performance may not necessarily mean more originations. “With so many potential loans not flowing to completion, ultimate impact on prepayments still needs to be demonstrated,” Descloux said. “Any stall at the current level would be indicative that even lower rates will be needed to stimulate marginal demand.” Visit and for further details. Write to Diana Golobay at

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