The Market Composite Index, a measure of mortgage loan application volume, decreased 4.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4.2 percent compared with the previous week. The four week moving average for the seasonally adjusted Market Index is up 3.0 percent.  

The Refinance Index decreased 5.7 percent from the previous week.  The four week moving average is up up 3.8 percent for the Refinance Index. The refinance share of mortgage activity decreased to 65.7 percent of total applications from 66.8 percent the previous week.

The seasonally adjusted Purchase Index was essentially unchanged from one week earlier. The unadjusted Purchase Index decreased 1.2 percent compared with the previous week and was 7.6 percent higher than the same week one year ago.  The four week moving average is up 1.1 percent for the seasonally adjusted Purchase Index.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.58 percent from 4.69 percent, with points increasing to 1.01 from 0.69 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The 30-year rate is the lowest since November 2010. The effective rate also decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 3.78 percent, with points increasing to 1.07 from 1.04 (including the origination fee) for 80 percent LTV loans. The effective rate also increased from last week.

The adjustable-rate mortgage (ARM) share of activity increased to 6.2 percent from 5.8 percent of total applications from the previous week.

"Interest rates fell last week as incoming economic data was weaker than anticipated. Despite this drop in rates, the number of refinance applications fell. In fact, the last time mortgage rates were this low, refinance volume was more than twenty percent higher. It is likely that many borrowers still cannot qualify to refinance given the lack of equity in their homes," said Mike Fratantoni, MBA's Vice President of Research and Economics.

From last week's MBA Apps recap : Loan Demand Lags Interest Rate Rally. Several Reasons Cited

Rates are at 6-month lows but loan demand hasn't increased as much as one might have anticipated. Last week we wrote, "Right now we're witnessing the beginnings of a mini-refinance boom in the primary mortgage market, but there has been little activity in the secondary market that would indicate increased rate locking by consumers." says MND's Managing Editor Adam Quinones. "However, if conventional 30-year rates reach 4.25%, we'd expect to see a mini-boom scenario play out. There is much stored demand in the system as many borrowers missed the boat on record low rates in October and early November. This crowd is waiting in the wings for those rates to return. Whether or not that happens is still very much up in the air"

In reaction to that comment, Ted Rood, a loan originator from MetLife Home Loans added, "One thing to consider regarding refi volume is that HUD effectively ended FHA streamlines over the course of the last year by tightening underwriting guidelines and jacking up monthly MIP fees. After the change, many existing FHA clients have been unable to meet net benefit rules,  even when dropping their rate by 1% or more, since their monthly MIP would double on the new loan. So FHA clients don't get to benefit from lower rates and HUD doesn't get new upfront MIPs from existing clients with clean payment histories who want to refinance".

READ MORE: New FHA MIP Structure to Slow Streamlines

READ MORE: Rents Seen Rising as Poor Credit Hurts Homeownership Demand

READ MORE: Realtors Request Looser Credit Regs as Home Sales Decline

The Market Composite Index, a measure of mortgage loan application volume, increased 1.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 0.9 percent compared with the previous week.  The four week moving average for the seasonally adjusted Market Index is up 5.2 percent. 

The Refinance Index increased 0.9 percent to its highest level since December 10, 2010.  The four week moving average is up up 7.1 percent for the Refinance Index. The refinance share of mortgage activity increased to 66.8 percent of total applications from 66.7 percent the previous week. This is the highest refinance share since January 28, 2011.

The seasonally adjusted Purchase Index increased 1.5 percent from one week earlier. The unadjusted Purchase Index increased 0.8 percent compared with the previous week and was 3.1 percent higher than the same week one year ago.  The four week moving average is up 1.2 percent for the seasonally adjusted Purchase Index.

The average contract interest rate for 30-year fixed-rate mortgages increased to 4.69 percent from 4.60 percent, with points decreasing to 0.69 from 0.93 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.78 percent from 3.75 percent, with points decreasing to 1.04 from 1.22 (including the origination fee) for 80 percent LTV loans. The effective rate also decreased from last week.

The adjustable-rate mortgage (ARM) share of activity decreased to 5.8 percent from 6.3 percent of total applications from the previous week.

Rates are at 6-month lows but loan demand hasn't increased as much as one might have anticipated. Last week we wrote, "Right now we're witnessing the beginnings of a mini-refinance boom in the primary mortgage market, but there has been little activity in the secondary market that would indicate increased rate locking by consumers." says MND's Managing Editor Adam Quinones. "However, if conventional 30-year rates reach 4.25%, we'd expect to see a mini-boom scenario play out. There is much stored demand in the system as many borrowers missed the boat on record low rates in October and early November. This crowd is waiting in the wings for those rates to return. Whether or not that happens is still very much up in the air"

In reaction to that comment, Ted Rood, a loan originator from MetLife Home Loans added, "One thing to consider regarding refi volume is that HUD effectively ended FHA streamlines over the course of the last year by tightening underwriting guidelines and jacking up monthly MIP fees. After the change, many existing FHA clients have been unable to meet net benefit rules,  even when dropping their rate by 1% or more, since their monthly MIP would double on the new loan. So FHA clients don't get to benefit from lower rates and HUD doesn't get new upfront MIPs from existing clients with clean payment histories who want to refinance".

READ MORE: New FHA MIP Structure to Slow Streamlines

READ MORE: Rents Seen Rising as Poor Credit Hurts Homeownership Demand

READ MORE: Realtors Request Looser Credit Regs as Home Sales Decline

The Market Composite Index, a measure of mortgage loan application volume, increased 7.8 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 7.1 percent compared with the previous week.  The four week moving average for the seasonally adjusted Market Index is up 3.6 percent. 

The Refinance Index increased 13.2 percent from the previous week and is at its highest level since the week ending December 10, 2010.  The four week moving average is up up 7.2 percent for the Refinance Index. The refinance share of mortgage activity increased to 66.7 percent of total applications from 63.1 percent the previous week.  This is the largest refinance share observed since late January.

The seasonally adjusted Purchase Index decreased 3.2 percent from one week earlier. The unadjusted Purchase Index decreased 3.3 percent compared with the previous week and was 1.7 percent lower than the same week one year ago.  The four week moving average is down 2.9 percent for the seasonally adjusted Purchase Index.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.60 percent from 4.67 percent, with points decreasing to 0.94 from 1.10 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.  This is the lowest 30-year rate recorded in the survey since the end of November 2010. The effective rate also decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.75 percent from 3.81 percent, with points increasing to 1.22 from 1.05 (including the origination fee) for 80 percent LTV loans.  This is the lowest 15-year rate recorded in the survey since early November 2010.  The effective rate also decreased from last week.

The adjustable-rate mortgage (ARM) share of activity decreased to 6.3 percent from 6.5 percent of total applications from the previous week.

"The 30-year fixed mortgage rate is now 53 basis points below its 2011 peak, and has decreased for five straight weeks," said Michael Fratantoni, MBA's Vice President of Research. "Over this five week span, the refinance index has increased by about 33 percent. Refinance application volumes remain about 50 percent below the most recent peak last October."

"Right now we're witnessing the beginnings of a mini-refinance boom in the primary mortgage market, but there has been little activity in the secondary market that would indicate increased rate locking by consumers." says MND's Managing Editor Adam Quinones. "However, if conventional 30-year rates reach 4.25%, we'd expect to see a mini-boom scenario play out. There is much stored demand in the system as many borrowers missed the boat on record low rates in October and early November. This crowd is waiting in the wings for those rates to return. Whether or not that happens is still very much up in the air"

READ MORE ABOUT A POTENTIAL SHIFT "DOWN IN COUPON"

The Market Composite Index, a measure of mortgage loan application volume, increased 8.2 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 8.3 percent compared with the previous week. The four week moving average for the seasonally adjusted Market Index is up 2.9 percent.

The Refinance Index increased 9.0 percent from the previous week, and is at its highest level since the week ending March 18, 2011.  The four week moving average is up 4.3 percent for the Refinance Index. The refinance share of mortgage activity increased to 63.1 percent of total applications from 62.7 percent the previous week. The refinance share is at its highest level since the week ending March 25, 2011.

The seasonally adjusted Purchase Index increased 6.7 percent from one week earlier. The unadjusted Purchase Index increased 7.1 percent compared with the previous week and was 25.8 percent lower than the same week one year ago. The four week moving average is up 0.4 percent for the seasonally adjusted Purchase Index.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.67 percent from 4.76 percent, with points increasing to 1.10 from 0.75 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.  The 30-year rate is at its lowest since December 2010. The effective rate also decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.81 percent from 3.96 percent, with points increasing to 1.05 from 0.82 (including the origination fee) for 80 percent LTV loans. The 15-year rate is at its lowest since November 2010. The effective rate also decreased from last week.

The adjustable-rate mortgage (ARM) share of activity decreased to 6.5 percent from 6.7 percent of total applications from the previous week.

"Rates dropped again last week as the Federal Reserve continued its QE2 asset purchase program.   The 30-year fixed mortgage rate is now 46 basis points below its 2011 peak, and has decreased for four straight weeks by a total of 31 basis points," said Michael Fratantoni, MBA's Vice President of Research. "Over this four week span, the refinance index has increased by about 18 percent. Despite the recent increases however, refinance application volumes remain more than 50 percent below levels seen last fall."

Re: The logic behind falling interest rates. Although the Fed's daily asset purchases have indeed been supportive of lower benchmark yields, there are big picture factors to consider in the directional move we've witnessed over the past month. Expansion in the global economy seems to be slowing and investors are acting increasingly nervous about their allocation choices. If it is confirmed that emerging economies have hit a rough patch,  the impact of such a slowdown would spread through the U.S. economy starting with the manufacturing sector. This would be a favorable development for interest rates and serve as a reminder of how sensitive our economic recovery really is in the long run.  Going full circle on Michael Fratantoni's comment on Fed asset purchases, the Federal Reserve is scheduled to complete its quantitative easing (QE) program by the end of June. If the economy does indeed slide for the worse and the Fed does not decide to re-up its QE program, it may actually lead interest rates lower as the broader economy suffers from reduced liquidity in financial markets.

Re: The refinance index being slow to react to falling mortgage rates. WE AGREE!

Would significantly lower interest rates spark an increase in loan demand?

We think 30-year fixed mortgage rates need to approach 4.25% before a sizable uptick in refinance demand is observed. On the buyer front, since early February we've heard reports from originators about a seasonal increase in purchase loan demand, since then purchase business seems to have slowed. Falling rates will certainly increase affordability conditions though, which helps offset the notion that home prices have more room to run lower. If you're looking to buy, be sure to access local market conditions with not only your Realtor but an appraiser as well. And for Heaven's sake...maintain your reserves/savings just in case home prices keep falling.

The road ahead is long and paved with much uncertainty....the economic recovery will be choppy at best until the housing market is able to sustain consistent positive progress.

The Market Composite Index, a measure of mortgage loan application volume, increased 8.2 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 8.3 percent compared with the previous week. The four week moving average for the seasonally adjusted Market Index is up 2.9 percent.

The Refinance Index increased 9.0 percent from the previous week, and is at its highest level since the week ending March 18, 2011.  The four week moving average is up 4.3 percent for the Refinance Index. The refinance share of mortgage activity increased to 63.1 percent of total applications from 62.7 percent the previous week. The refinance share is at its highest level since the week ending March 25, 2011.

The seasonally adjusted Purchase Index increased 6.7 percent from one week earlier. The unadjusted Purchase Index increased 7.1 percent compared with the previous week and was 25.8 percent lower than the same week one year ago. The four week moving average is up 0.4 percent for the seasonally adjusted Purchase Index.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.67 percent from 4.76 percent, with points increasing to 1.10 from 0.75 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.  The 30-year rate is at its lowest since December 2010. The effective rate also decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.81 percent from 3.96 percent, with points increasing to 1.05 from 0.82 (including the origination fee) for 80 percent LTV loans. The 15-year rate is at its lowest since November 2010. The effective rate also decreased from last week.

The adjustable-rate mortgage (ARM) share of activity decreased to 6.5 percent from 6.7 percent of total applications from the previous week.

"Rates dropped again last week as the Federal Reserve continued its QE2 asset purchase program.   The 30-year fixed mortgage rate is now 46 basis points below its 2011 peak, and has decreased for four straight weeks by a total of 31 basis points," said Michael Fratantoni, MBA's Vice President of Research. "Over this four week span, the refinance index has increased by about 18 percent. Despite the recent increases however, refinance application volumes remain more than 50 percent below levels seen last fall."

Re: The logic behind falling interest rates. Although the Fed's daily asset purchases have indeed been supportive of lower benchmark yields, there are big picture factors to consider in the directional move we've witnessed over the past month. Expansion in the global economy seems to be slowing and investors are acting increasingly nervous about their allocation choices. If it is confirmed that emerging economies have hit a rough patch,  the impact of such a slowdown would spread through the U.S. economy starting with the manufacturing sector. This would be a favorable development for interest rates and serve as a reminder of how sensitive our economic recovery really is in the long run.  Going full circle on Michael Fratantoni's comment on Fed asset purchases, the Federal Reserve is scheduled to complete its quantitative easing (QE) program by the end of June. If the economy does indeed slide for the worse and the Fed does not decide to re-up its QE program, it may actually lead interest rates lower as the broader economy suffers from reduced liquidity in financial markets.

Re: The refinance index being slow to react to falling mortgage rates. WE AGREE!

Would significantly lower interest rates spark an increase in loan demand?

We think 30-year fixed mortgage rates need to approach 4.25% before a sizable uptick in refinance demand is observed. On the buyer front, since early February we've heard reports from originators about a seasonal increase in purchase loan demand, since then purchase business seems to have slowed. Falling rates will certainly increase affordability conditions though, which helps offset the notion that home prices have more room to run lower. If you're looking to buy, be sure to access local market conditions with not only your Realtor but an appraiser as well. And for Heaven's sake...maintain your reserves/savings just in case home prices keep falling.

The road ahead is long and paved with much uncertainty....the economic recovery will be choppy at best until the housing market is able to sustain consistent positive progress.

The MBA's loan application survey covers over 50% of all U.S. residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a snapshot view of consumer demand for mortgage loans. In a falling mortgage rate environment, a trend of increasing refinance applications implies consumers are seeking out lower monthly payments. If consumers are able to reduce their monthly mortgage payment and increase disposable income through refinancing, it can be a positive for the economy as a whole (may boost consumer spending. It also allows debtors to pay down personal liabilities faster. A trend of declining purchase applications implies home buyer demand is shrinking.

Excerpts from the Release...

The Market Composite Index, a measure of mortgage loan application volume, increased 4.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 4.1 percent compared with the previous week.

The Refinance Index increased 6.0 percent from the previous week. The four week moving average remained unchanged.  The refinance share of mortgage activity increased to 62.7 percent of total applications from 61.6 percent the previous week. This is the highest refinance share of the month.

The seasonally adjusted Purchase Index increased 0.3 percent from one week earlier. The unadjusted Purchase Index increased 1.1 percent compared with the previous week and was 36.9 percent lower than the same week one year ago.  The four week moving average is down 2.4 percent.

The average contract interest rate for 30-year fixed-rate mortgages decreased for the third consecutive week to 4.76 percent from 4.80 percent, with points decreasing to 0.76 from 1.00 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the lowest 30-year fixed contract rate since December 3, 2010. The effective rate also decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.96 percent from 4.03 percent, with points decreasing to 0.82 from 0.96 (including the origination fee) for 80 percent LTV loans. This is the lowest 15-year fixed contract rate since November 26, 2010. The effective rate also decreased from last week.

"Although demand for home loans moved up modestly last week as rates hit their best levels of the year, loan application activity continues to stagnate overall", explains MND's Managing Editor Adam Quinones. "We'll need to see 30-year fixed mortgage rates approach 4.25% before a sizable uptick in refinancing is observed. On the buyer front, since early February we've heard reports from originators about a seasonal increase in purchase applications. The Purchase Index has however lost momentum following FHA's mortgage insurance fee increase on April 18th."

READ MORE: Fencesitters See Little Incentive to Refinance at Current Rates

READ MORE: Purchase Applications Deflate After FHA Fee Hike

READ MORE: Loan Officer Survey: Lending Regs No Looser

The MBA's loan application survey covers over 50% of all U.S. residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a snapshot view of consumer demand for mortgage loans. In a falling mortgage rate environment, a trend of increasing refinance applications implies consumers are seeking out lower monthly payments. If consumers are able to reduce their monthly mortgage payment and increase disposable income through refinancing, it can be a positive for the economy as a whole (may boost consumer spending. It also allows debtors to pay down personal liabilities faster. A trend of declining purchase applications implies home buyer demand is shrinking.

Excerpts from the Release...

The Market Composite Index, a measure of mortgage loan application volume, increased 4.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 4.1 percent compared with the previous week.

The Refinance Index increased 6.0 percent from the previous week. The four week moving average remained unchanged.  The refinance share of mortgage activity increased to 62.7 percent of total applications from 61.6 percent the previous week. This is the highest refinance share of the month.

The seasonally adjusted Purchase Index increased 0.3 percent from one week earlier. The unadjusted Purchase Index increased 1.1 percent compared with the previous week and was 36.9 percent lower than the same week one year ago.  The four week moving average is down 2.4 percent.

The average contract interest rate for 30-year fixed-rate mortgages decreased for the third consecutive week to 4.76 percent from 4.80 percent, with points decreasing to 0.76 from 1.00 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the lowest 30-year fixed contract rate since December 3, 2010. The effective rate also decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.96 percent from 4.03 percent, with points decreasing to 0.82 from 0.96 (including the origination fee) for 80 percent LTV loans. This is the lowest 15-year fixed contract rate since November 26, 2010. The effective rate also decreased from last week.

"Although demand for home loans moved up modestly last week as rates hit their best levels of the year, loan application activity continues to stagnate overall", explains MND's Managing Editor Adam Quinones. "We'll need to see 30-year fixed mortgage rates approach 4.25% before a sizable uptick in refinancing is observed. On the buyer front, since early February we've heard reports from originators about a seasonal increase in purchase applications. The Purchase Index has however lost momentum following FHA's mortgage insurance fee increase on April 18th."

READ MORE: Fencesitters See Little Incentive to Refinance at Current Rates

READ MORE: Purchase Applications Deflate After FHA Fee Hike

READ MORE: Loan Officer Survey: Lending Regs No Looser

The MBA's loan application survey covers over 50% of all U.S. residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a snapshot view of consumer demand for mortgage loans. In a falling mortgage rate environment, a trend of increasing refinance applications implies consumers are seeking out lower monthly payments. If consumers are able to reduce their monthly mortgage payment and increase disposable income through refinancing, it can be a positive for the economy as a whole (may boost consumer spending. Also allows debtors to pay down personal liabilities faster). A trend of declining purchase applications implies home buyer demand is shrinking.

Excerpts from the Release...

The Market Composite Index, a measure of mortgage loan application volume, increased 5.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 5.9 percent compared with the previous week.

The Refinance Index increased 2.7 percent from the previous week.  The four week moving average is down 5.7 percent.  The refinance share of mortgage activity decreased to 58.5 percent of total applications from 60.3 percent the previous week. This is the lowest refinance share since May 7, 2010.

The seasonally adjusted Purchase Index increased 10.0 percent to its highest level since December 3, 2010, driven largely by a 17.6 percent increase in Government purchase applications. The unadjusted Purchase Index increased 10.9 percent compared with the previous week and was 11.4 percent lower than the same week one year ago. The four week moving average is up 2.5 percent.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.83 percent from 4.98 percent, with points increasing to 1.07 from 0.93 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.07 percent from 4.17 percent, with points decreasing to 1.02 from 1.22 (including the origination fee) for 80 percent LTV loans. The effective rate also decreased from last week.

"Purchase application volume jumped last week largely due to another sharp increase in applications for government loans. Borrowers were likely motivated to apply for loans before the scheduled increase in FHA insurance premiums," said Michael Fratantoni, MBA's Vice President of Research and Economics.  "Refinance activity increased somewhat, as rates dropped to their lowest level in a month towards the end of the week."

READ MORE: FHA Hikes Annual MIP Fee

SEE MORE: Visualizing the Mortgage Rate Rally

The MBA's loan application survey covers over 50% of all U.S. residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a snapshot view of consumer demand for mortgage loans. In a falling mortgage rate environment, a trend of increasing refinance applications implies consumers are seeking out lower monthly payments. If consumers are able to reduce their monthly mortgage payment and increase disposable income through refinancing, it can be a positive for the economy as a whole (may boost consumer spending. Also allows debtors to pay down personal liabilities faster). A trend of declining purchase applications implies home buyer demand is shrinking.

Excerpts from the Release...

The Market Composite Index, a measure of mortgage loan application volume, decreased 6.7 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index decreased 6.3 percent compared with the previous week.

The Refinance Index decreased 7.7 percent to its lowest level since February 11, 2011.    The four week moving average is down 5.3 percent.  The refinance share of mortgage activity decreased to 60.3 percent of total applications from 61.2 percent the previous week. This is the lowest refinance share since May 7, 2010.  

The seasonally adjusted Purchase Index decreased 4.7 percent from one week earlier. The unadjusted Purchase Index decreased 4.1 percent compared with the previous week and was 11.4 percent lower than the same week one year ago.  The four week moving average is up 0.7 percent.

The average contract interest rate for 30-year fixed-rate mortgages increased for the fourth consecutive week to 4.98 percent from 4.93 percent, with points increasing to 0.93 from 0.69 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the highest average contract rate reported since February 18, 2011.  The effective rate also increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 4.17 percent from 4.14 percent, with points increasing to 1.22 from 1.09 (including the origination fee) for 80 percent LTV loans. The effective rate also increased from last week.

This is the explanation we offered two weeks ago on reduced loan demand. From Pool of Eligible Refinance Candidates Dried Up at Current Rates...

"Recently lower mortgage rates have done little to motivate potential refinance candidates." said MND's Managing Editor Adam Quinones. "This isn't a big surprise as most qualified borrowers  simply don't have an incentive to refinance because they already did last year when rates were near record lows.  Other than that, qualification issues continue to prevent many folks from lowering their monthly payment. We do however expect a modest increase in purchase activity heading into the spring buying season."

Rates have moved higher since we shared that observation two weeks ago, and refinance demand has suffered as a result. No surprises there! We are however still hearing a considerable amount of chatter on the street regarding a seasonal increase in purchase demand.  The consensus from originators and pipeline hedgers is for the majority of those deals to close in May and June.  Are you seeing the same thing?

The MBA's loan application survey covers over 50% of all U.S. residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a snapshot view of consumer demand for mortgage loans. In a falling mortgage rate environment, a trend of increasing refinance applications implies consumers are seeking out lower monthly payments. If consumers are able to reduce their monthly mortgage payment and increase disposable income through refinancing, it can be a positive for the economy as a whole (may boost consumer spending. Also allows debtors to pay down personal liabilities faster). A trend of declining purchase applications implies home buyer demand is shrinking.

Excerpts from the Release...

The Market Composite Index, a measure of mortgage loan application volume, Mortgage applications decreased 7.5 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index decreased 7.2 percent compared with the previous week.  

"Treasury and mortgage rates increased towards the end of last week, as global markets calmed following the recent crises in Japan and the Middle East," said Michael Fratantoni from MBA. "Refinance volume predictably fell in response to these rate increases. As rates climb back to 5%, fewer homeowners have both the incentive and the ability to refinance."

MND's Adam Quinones had this to say last week...

"Recently lower mortgage rates have done little to motivate potential refinance candidates." said MND's Managing Editor Adam Quinones. "This isn't a big surprise as most qualified borrowers  simply don't have an incentive to refinance because they already did last year when rates were near record lows.  Other than that, qualification issues continue to prevent many folks from lowering their monthly payment. We do however expect a modest increase in purchase activity heading into the spring buying season."

Today he adds, "It certaintly seems like the folks who missed out on a refinance in November are the only borrowers remaining who are eligible for a rate reduction.  Unfortunately we'll need to see 30-year mortgage rates in the 4.00 - 4.25% range before a significant uptick in refinance activity is observed. Otherwise originators should be building their purchase business."