Mortgage applications drop week-to-week

Mortgage applications filed last week decreased a seasonally adjusted 2.2% compared with the week before, even though mortgage rates improved somewhat, the Mortgage Bankers Association reported on Wednesday.

Applications for the week ended Aug. 28 were up an unadjusted 22.7% from the same week in 2008, the MBA said. The Washington-based MBA's survey covers about half of all U.S. retail residential mortgage applications.

The week-to-week drop marked a downturn from the comparable 7.5% increase in filings for the week ended Aug. 21.

Mortgage applications to purchase home for the latest week were down a seasonally adjusted 1.0%, compared with the week before. Included within those purchase applications, government-insured mortgages, such as those through the Federal Housing Administration, were up a seasonally adjusted 0.5% from the prior week, according to the MBA's survey.

The government-insured share of mortgage purchase applications for August stood at 40.4%, up from 38.3% in July. The increase put government-insured mortgages at the highest proportion seen since February 1991, the MBA said.

Meanwhile, applications to refinance existing home loans were down 3.1% on a week-to-week basis.

Refinancings accounted for 56.5% of all filings last week, unchanged from the prior week. Adjustable-rate mortgages made up 5.6% of all mortgages, down from 6.5%.

Good stats here: refis dropped (in spite of dipping rates); ARMs only make up 5.6% of applications (showing future stability in lending). Will next week or two weeks from now show an increase in applications (as we enter the typically strong post-Labor Day period? We'll see soon. And that will give us a good indication of what the market will do for the rest of the year.

SOURCE: MARKET WATCH