Mortgage applications decreased during the holiday season

Despite mortgage rates remaining at low levels during the two week holiday period at the end of December, mortgage activity decreased. The Mortgage Bankers Association's Weekly Mortgage Applications Survey for the weeks ending December 23, 2011 and December 30, 2011 found mortgage applications dropped while consumers spent time on festive activities.

The survey for the week ending December 30 showed mortgage applications decreased 3.7 percent compared to the week ending December 16. The refinance index also dropped 1.9 percent during the two week period, and the purchase index dropped 9.7 percent compared to levels reported two weeks prior. The market composite index of the survey, or the measure of total mortgage loan application volume, was 39 percent higher in the last two weeks of 2011 compared to the same period in 2010.

Michael Fratatoni, the vice president of research and economics at the MBA, said insurance premiums for Federal Housing Administration loans will start to increase, thus mortgage rates and application activity are expected to remain flat through February.

HSH.com's Weekly Mortgage Rate Radar for the week ending January 3 found a slight increase in mortgage rates compared to the previous week. The 30-year fixed-rate mortgage rose a basis point to 4.07 percent, while the 5/1 hybrid ARM rates increased two points to 3.02 percent.

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