MBA: "Sand States" Becoming "HARP States" as Program Popularity Grows

by devteam March 22nd, 2012 | Share

Interestrnrates rose to the highest levels since December during the week ended March 16rnand, driven largely by refinancing, mortgage applications activity fellrnsignificantly.   The Mortgage Bankers Association (MBA)rnreported that its Market Composite Index, a measure of mortgage applicationrnvolume, decreased 7.4 percent from the previous week on a seasonally adjustedrnbasis and 7.1 percent unadjusted.   </p

The RefinancernIndex decreased 9.3 percent from the previous weekrnand the refinancing share of mortgage activity decreased to 73.4 percent ofrntotal applications from a 75.1 percent share during the week ended Marchrn9.  This is the lowest share of applications for refinancing since Julyrn2011, however as noted below, the new version of the Home Affordable Refinancing Program (HARP) had arnsignificant impact on refinancing in a number of states.rn The seasonally adjusted Purchase Index decreased 1.0 percent from one week earlier and thernunadjusted Purchase Index was down 0.6 percent fromrnthe previous week and was 1.9 percent lower than the same week one year ago.</p

Jay Brinkmann,rnMBA’s Senior Vice President of Research and Education said, “With the raternincrease last week, refinances are obviously slowing, and the refinance sharernat 73% is down to its lowest level since last July.  With rate/termrnrefinances falling as we go forward, HARP will be a bigger percentage ofrnrefinances but will be more concentrated in certain states.   Brinkmann noted that, “Some of thernlargest institutions are reporting that the HARP share of their refinancesrnremained at about 30% last week, but HARP volume is not equal across therncountry. The states that I started referring to years ago as the sand states</bthat had the worst delinquencies we now should start calling the HARP statesrnfor mortgage refinances.  We saw big state-level differences in refinancernapplications for February over January: Florida was up 49%, Arizona was up 61%,rnand Nevada was up 71%.  Refinances in the rest of the country wererngenerally flat or even down.  For example, Texas had no change, Coloradornwas down 3%, Connecticut was up only 2%, and Virginia was up 1%.  HARPrnclearly is a driving force in those states that saw the most defaults and thernbiggest drops in home equity."</p

The four-weekrnmoving average for the seasonally adjusted Purchase Index rose 3.25 percentrnwhile the seasonally adjusted Market Index lost 2.79 percent and the RefinancernIndex was down 4.31 percent.</p

The increase inrninterest rates and effective rates affected all loan products tracked by thernMBA. The average rate for 30-year fixed-rate mortgages (FRM) with conformingrnloan balances ($417,500 or less) increased to 4.19 percent from 4.06rnpercent, with points increasing to 0.47 from 0.43.  Thernaverage rate for jumbo FRM (with balances greater than $417,500) increased torn4.49 percent with 0.38 point from 4.39 percent with 0.39 point.  </p

The rate for 30-yearrnFRM backed by the FHA increased to 3.93 percentrnfrom 3.82 percent, with points decreasing torn0.48 from 0.55. Rates for 15-year FRM jumpedrn11 basis points to 3.47 percent and points increasernto 0.40 from 0.34. </p

The 5/1rnadjustable-rate mortgage (ARM) had an average rate of 2.90 percent with 0.44rnpoint compared to 2.81 percent with 0.37 point the previous week. The ARM share of activity decreased to 5.6rnpercent from 5.8 percent of total applicationsrnfrom the previous week.</p

All rates quotedrnare for loans with an 80 percent loan-to-value ratio and points include thernorigination fee.</p

The average loan size of all loans for home purchase in the US rosernto $225,463 in February from $216,888 in January. The average loan size for arnrefinance was $222,048, down from $227,563 in January.  The largest loanrnfor both purchase and refinancing were made in the Pacific region at $324,606rnand $305,949 respectively.  </p

MBA’s WeeklyrnMortgage Application Survey covers over 75 percent of all U.S. retailrnresidential mortgage applications, and has been conducted weekly sincern1990.  Respondents include mortgage bankers, commercial banks andrnthrifts.  Base period and value for all indexes is March 16, 1990=100.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of is prohibited.

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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