Mortgage applications increased 9.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 11, 2012. 

The Market Composite Index, a measure of mortgage loan application volume, increased 9.2 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 8.7 percent compared with the previous week.  The Refinance Index increased 13.0 percent from the previous week.  The seasonally adjusted Purchase Index decreased 2.4 percent from one week earlier. The unadjusted Purchase Index decreased 2.4 percent compared with the previous week and was 1.0 percent lower than the same week one year ago.

The four week moving average for the seasonally adjusted Market Index is up 1.77 percent.  The four week moving average is up 1.57 percent for the seasonally adjusted Purchase Index, while this average is up 1.88 percent for the Refinance Index.

The refinance share of mortgage activity increased to 74.9 percent of total applications from 72.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.4 percent from 5.7 percent of total applications from the previous week.

“A flare up of the sovereign debt troubles in Europe once again led investors to flee to the safety of US Treasury securities last week.  As a result, mortgage rates have reached new lows in our survey, and refinancing application volumes picked up substantially as a result,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.    “Survey participants indicated that this was not due primarily to HARP volume – the HARP share of refinances fell to 28 percent of refinance applications, down relative to last week and last month, when the share was just above 30 percent in April.  The increase in refinance activity last week was concentrated in the conventional sector, which was up around 14 percent for the week, while government refinance applications were up only 4 percent.”

During the month of April, the investor share of applications for home purchase was at 5.7 percent, unchanged from March.  The Pacific region has the largest investor share of applications for home purchase at 9.5 percent. In addition, the share of purchase mortgages for second homes decreased to 5.7 percent in April from 5.8 percent in March.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.96 percent, the lowest rate in the history of the survey, from 4.01 percent, with points decreasing to 0.37 from  0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.  The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 4.20 percent, the lowest rate in the history of the survey, from 4.29 percent, with points remaining unchanged at 0.36 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.75 percent, the lowest rate in the history of the survey, from 3.81 percent, with points increasing to 0.66 from 0.45 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.26 percent, the lowest rate in the history of the survey, from 3.29 percent, with points increasing to 0.41 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 2.80 percent from 2.83 percent, with points increasing to 0.37 from 0.36 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.