Refinancing Hits Three-Year High as Rates Continue to Set Record Lows

by devteam July 25th, 2012 | Share

Applications to refinance home mortgages</awere higher last week than at any time in over three years according to thernMortgage Bankers Association (MBA).  Thernrefinancing component of MBA's Market Composite Index, a measure of mortgagernapplication volume, increased a full 2.0 percent on a seasonally adjusted basisrnduring the week ended July 20.  Thisrnbrought the Refinancing Index to a level last seen during the week ended Aprilrn19, 2009.  Applications for refinancingrnrepresented an 81 percent share of all loan applications for the week, up fromrn80 percent a week earlier.</p

The Composite Index rose 0.9 on both arnseasonally adjusted and unadjusted basis, held back by the Purchase Index whichrnfell 3 percent from the previous week.  MBArnsaid that the Purchase Index was also down on an unadjusted basis but did notrnprovide information relating it to the previous week or levels one year earlier.rn</p

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

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


Refinance Index vs 30 Yr Fixed</p

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


While mortgage rates moved only slightly fromrnweek to week it was enough to establish three new historic lows and the effectivernrate of all loans decreased.  The averagerncontract interest rate for conforming (balance of $417,500 or less) 30-yearrnfixed-rate mortgages (FRM) was unchanged at 3.74 percent with points nudgingrndown from 0.45 to 0.43.  The 30-yearrnconforming FRM has been below 4 percent since the first week in May.  </p

The jumborn30-year FRM (loan balance over $417,500) increased one basis point to 3.99rnpercent while points decreased from 0.32 to 0.28.  The conforming 15-year FRM established a newrnlow, falling to 3.07 percent with 0.45 point from 3.12 percent with 0.48rnpoint.  FHA-backed 30-year FRM decreasedrnto a new low of 3.52 percent with 0.52 point from 3.55 percent with 0.44 point. </p

Thernaverage contract interest rate for 5/1 adjustable rate mortgages (ARMs)rndecreased to 2.68 percent, the lowest rate in the history of the survey, from 2.71 percent, with points decreasingrnto 0.35 from 0.51.  ARMs had a 4 percentrnshare of mortgage applications.  </p

Interestrnrate data is for loans with a loan-to-value ratio of 80 percent and pointsrninclude the application fee. </p

The MBA’s WeeklyrnMortgage Application Survey covers over 75 percent of all U.S. retailrnresidential mortgage applications, and has been conducted weekly since 1990. rnRespondents include mortgage bankers, commercial banks and thrifts.  Basernperiod and value for all indexes is March 16, 1990=100.

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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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