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Refinancing Applications Surge to Peak Levels for the Year
Applications for refinancing surgedrnduring the week ended July 13 sending mortgage application volumes to “nearrnpeak levels for the year” according to the Mortgage Bankers Associationrn(MBA). This drove the MBA’s MarketrnComposite Index, a measure of overall mortgage application volume, up 16.9rnpercent on a seasonally adjusted basis and 46 percent on an unadjusted basisrnfrom the previous week.</p
The Refinance index increased 22 percent</bfrom the previous week and refinancing represented 80.1 percent of all mortgagernapplications compared to 77 percent during the week ended July 6. The seasonally adjusted Purchase Indexrndecreased 0.1 percent from a week earlier but the unadjusted Index was up 25rnpercent although it was 3 percent lower than the same week in 2011. </p
Applications for the Home AffordablernRefinance Program (HARP 2.0), the government’s program for low or no equityrnmortgages represented 24 percent of applications for refinancing. This indicates further growth in the program thatrnhad claimed a new market share high of a 20 percent in its May activity reportrnreleased last week. </p
Mike Fratantoni, MBA’s Vice President ofrnResearch and Economics said the near peak levels in refinancing applicationsrnresulted from new low interest rates which were “driven down by growing concernsrnabout the health of the U.S. economy.”</p
Purchase Index vs 30 Yr Fixed</b</p
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Refinance Index vs 30 Yr Fixed</p
ChartManager.loadChart(‘refiappschart’, ‘RefiMtgAppChart’);
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Rates for all fixed rate mortgages (FRM)rnfell again during the week as did their effective rates, establishing new lowsrnacross the board. The average contractrninterest rate for 30-year FRM with a conforming balance of $417,500 or less wasrn3.74 percent with 0.45 point compared to 3.79 percent with 0.36 point thernprevious week. The jumbo 30-year FRMrn(loan balance over $417,500) carried an average rate of 3.98 percent with 0.32rnpoint, down from 4.05 percent with 0.34 point.</p
Fifteen-year FRM rates averaged 3.12rnpercent with 0.48 point compared to 3.15 percent with 0.43 point and the raternfor 30-year FRM backed by FHA decreased to 3.55 percent from 3.63 percent withrnpoints increasing to 0.44 from 0.36. </p
The 5/1 adjustable rate mortgage (ARM) wasrnthe only outlier. The product’s rate remainedrnunchanged at an historic low of 2.71 percent although points increased fromrn0.36 to 0.51 and the effective rate increased. rnARMs accounted for 4.1 percent of all mortgage applications.</p
Interest rates quoted are for loans withrnan 80 percent loan-to-value ratio and points include the application fee.
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About the Author
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Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.
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