30-Year Fixed Mortgage Rates Fall Below 6 Percent to New Record Low
September 4, 2002
Mortgage Loan Applications Decrease Slightly from Previous Week
WASHINGTON, D.C. (September 4, 2002) The market composite index of mortgage loan applications -- a measure of mortgage loan applications for purchases and refinancings -- for the week ending August 30 decreased 1.9 percent to 1059.5 on a seasonally-adjusted basis from 1079.7, according to the Weekly Mortgage Applications Survey of the Mortgage Bankers Association of America (MBA), which was released today. On an unadjusted basis, the application index decreased 2.5 percent but was up 71.4 percent compared to the same week a year earlier.
The MBA seasonally adjusted Purchase Index increased to 359.7 from 344.7 the previous week. The seasonally adjusted Refinance Index decreased to 5129.6 from 5355.4 the previous week. Other seasonally adjusted index activity included the Conventional Index, which decreased to 1532.1 from the 1567.0 the previous week. The Government Index increased to 270.8 from 266.5 the previous week.
"The refinancing wave of the last six weeks is now on pace to eclipse the unprecedented refinancing activity that we saw last October and November," noted Phil Colling, MBA economist. "The interest rates that existed last week are comparable to those of 1963. This has been brought on by a weaker-than-expected economy, no signs of inflation and the ‘flight to quality' phenomenon that results when investors pull money out of stocks and invest in bonds, which drives down interest rates. The week isn't over yet, but since the yield on 10-year Treasury notes dropped again yesterday it is possible that mortgage rates could drop again this week."
Refinancing activity represented 70.9 percent of total applications, decreasing from 72.1 percent the previous week. The share of ARM activity decreased to 12.4 percent from 13.8 percent the previous week.
The average contract interest rate for 30-year fixed rate mortgages decreased to a new record low of 5.99 percent from 6.16 percent the previous week, with points increasing to 1.59 from 1.52 the previous week (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The previous record low for the 30-year fixed rate of 6.13 percent occurred the week ended August 9, 2002.
The average contract interest rate for 15-year fixed rate mortgages decreased to a new record low of 5.40 percent from 5.55 percent the previous week, with points decreasing to 1.53 from to 1.58 the previous week (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The previous record low for the 15-year fixed rate of 5.52 percent occurred the week ended August 9, 2002.
The average contract interest rate for 1-year ARMs was 4.16 percent, decreasing from 4.24 percent the previous week, with points increasing slightly to 1.13 from 1.12 the previous week (including the origination fee) for 80 percent LTV loans.
Source: Mortgage Bankers Association
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