HARP Activity Increasing Even as Refinancing Contracts

by devteam February 29th, 2012 | Share

Applicationsrnfor purchase mortgages jumped during the week ended February 24, but thernMortgage Bankers Association’s (MBA) Market Composite Index still finished thernweek down slightly from the week before. rnThe index, derived from the MBA’s Weekly Mortgage Application Survey decreasedrn0.3 percent from the previous week on a seasonally adjusted basis and 9.4rnpercent unadjusted. The week’s results are also adjusted for the Presidents Dayrnholiday.</p

ThernPurchase Index increased 8.2 percent on a seasonally adjusted basis from the weekrnended February 17.  On an unadjustedrnbasis it increased 0.9 percent from the previous week but was 4.3 percent lowerrnthan the same week in 2011. The Refinance Index was down 2.2 percent </p

The four weekrnmoving average for the seasonally adjusted Composite was up 0.33 percent andrnthe moving average for the refinance index increased by 0.64 percent.  The moving average of the seasonally adjustedrnPurchase Index was down 0.96 percent. </p

Refinancing accountedrnfor 77.9 percent of all mortgage applications during the week compared to 80.1rnthe week before.  This was the lowestrnshare for refinancing since December 2 and the first time refinancing droppedrnbelow an 80 percent level since December 9.</p

The government’srnHome Affordable Refinance Program (HARP) is starting to take hold in the  applications figures.  According to Michael Fratantoni, MBA’s VicernPresident of Research and Economics, more than 20 percent of refinancernapplications last week were for HARP loans. “The HARP share of totalrnrefinance applications has increased over the past month,” he said, and “purchasernapplication volume increased over the week, but remains within the narrow andrnanemic range of activity we have seen since the expiration of the homebuyer taxrncredit in May 2010.”</p

In January 86.4rnpercent of home purchase applications were for 30-year fixed-rate mortgagesrn(FRM), 6.5 percent were for 15-year FRM, and 5.4 percent were for adjustablernrate mortgages (ARM).  “Other” FRM withrnamortizations schedules other than 15 and 30-year terms represented 1.7 percentrnof all purchase applications.  Thernpercentages of 15-year and ARM mortgages were down from December while thernother two categories increased.</p

Purchase Index vs 30 Yr Fixed</b</p

ChartManager.loadChart(‘purchaseappschart’, ‘PurchaseMtgAppChart’);


Refinance Index vs 30 Yr Fixed</p

ChartManager.loadChart(‘refiappschart’, ‘RefiMtgAppChart’);


The average contract interest rate for conforming (balances underrn$417,500) 30-year FRM decreased from 4.09 percent with 0.53 point to 4.07rnpercent with 0.51 point and the effective rate decreased from the previousrnweek.  Rates for the jumbo 30-year FRM -rnloans with balances over $417,500 – increased to 4.34 percent from 4.32 percentrnbut points were down to 0.40 from 0.42. rnThe effective rate increased.   rn</p

Rates for 30-year fixed-rate mortgages backed by thernFHA were down one basis point to 3.86 percent, the lowest rate of the year, butrnpoints jumped to 0.80 from 0.41. The effective rate increased. </p

Fifteen-yearrnmortgage rates ticked down from 3.38 percent to 3.36 percent with pointsrnincreasing to 0.38 from 0.37.  Therneffective rate decreased from the previous week. </p

The biggest rate changernof the week was in 5/1 ARMs,  This rate decreased to 2.78 percent from 2.94rnpercent, with pointsrndecreasing to 0.38 from 0.44.  This isrnthe lowest 5/1 ARM rate since MBA began tracking the series in January 2011.  The effective rate decreased.  Adjustable-rate mortgages had a 5.0 percent sharernof activity during the week compared to 5.3 percent the previous week.</p

 All rates arernquoted for 80 percent loan-to-value mortgages and points include the originationrnfee.</p

MBA’s weekly surveyrncovers over 75 percent of all U.S. retail residential mortgage applications,rnand has been conducted weekly since 1990.  Respondents include mortgagernbankers, commercial banks and thrifts.  Base period and value for allrnindexes is March 16, 1990=100.</p


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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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