Housing Bubble

Fixed Rate Mortgages reach record low again

May 21, 2003

Washington, D.C. - The Market Composite Index of mortgage loan applications - a measure of mortgage loan applications for purchases and refinancings - for the week ending May 16 increased to 1562.8 on a seasonally-adjusted basis from 1417.8 one week earlier, according to the Weekly Mortgage Applications Survey of the Mortgage Bankers Association of America (MBA), which was released today. On an unadjusted basis, the Index increased by 9.7 percent and was up 196.2 percent compared to the same week a year earlier.

The MBA seasonally adjusted Purchase Index decreased to 395.8 from 415.2 the previous week. The seasonally adjusted Refinance Index increased to 8351.1 from 7250.0 one week earlier. Other seasonally adjusted index activity included the Conventional Index, which increased to 2313.5 from 2078.3 the previous week. The Government Index decreased to 310.2 from 315.7 the previous week.

Refinancing activity increased to 76.0 of total applications from 72.4 percent the previous week. The share of ARM activity decreased to 12.5 percent from 12.7 percent the previous week.

"Last week, long-term interest rates continued to decrease in response to the Federal Open Market Committee’s May 6 comments regarding the current very low level of inflation," noted MBA economist Phil Colling. "Interest rates are now at 45-year lows, and consumers are definitely taking advantage these rates. MBA now expects 2003 to be yet another record year in terms of mortgage originations."

The average contract interest rate for 30-year fixed rate mortgages decreased to a record low of 5.17 percent from the previous record low of 5.27 percent one week earlier, with points decreasing to 1.40 from 1.43 the previous week (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed rate mortgages decreased to a record low 4.61 percent from the previous record low of 4.68 percent one week earlier, with points decreasing to 1.35 from 1.49 the previous week (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

Source: Mortgage Bankers Association of America (MBA)