Mortgage application activity was mixed, according to the Mortgage Bankers Association's (MBA) weekly survey, with the Refinance Index declining despite a slight easing in the 30-year effective mortgage rate.
Meanwhile, the Purchase Index increased as a result of a jump in government loans. Michael Fratantoni, MBA vice president of research and economics, said: "Borrowers were likely motivated to apply before a scheduled increase in FHA insurance premiums that became effective last Friday."
The Purchase Index rose 6.7% to ~201 — its highest level for 2011, "but remains relatively low by historical standards," Fratantoni said, "at levels last seen in 1997."
The Government Purchase Index component jumped 10.3% to its highest level since early May 2010 and just after expiration of the home buyers' tax credit.
Meanwhile, the Refinance Index declined 6.2% to ~2084. While the effective mortgage was lower as points declined to 0.70 from 0.83 for 80% LTV loans as mortgage rates increased just a basis point to 4.93%, many of the credit-eligible borrowers remain outside of the refinancing window.
As a percent of total application activity, refinance share declined to 61.2% from 64.3% and is at its lowest level since May 7, 2010.
For the month of March, the Refinance Index averaged 13.5% higher than February as mortgage rates averaged 11 basis points lower to 4.84%.
Despite the pickup, the number of collection days declines in April to 20 from 23 that will offsetting. Currently, speeds are seen nearly 10% lower from March estimates.
Later this afternoon, March prepayment reports will be released. The consensus projection is for conventional speeds to increase 2% - impacted by four extra collection days in the month to 23, while Ginnies are predicted slower by around 5% due to the influence of tightening in Federal Housing Administration underwriting through higher fees.
Net issuance for the month will be moderately positive as agency MBS paydowns are estimated at $79 billion, while March issuance totaled $89 billion.