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Wednesday, August 10, 2011

Ultra low mortgage rates cause a surge in Refinances

Mortgage applications jumped 21.7% this past week as market volatility pushed mortgage rates lower, spurring a 30% rise in refinancing applications, an industry trade group said.
The Mortgage Bankers Association noted the market composite index – a measure of mortgage loan application volume – shot up 21.7% over the previous week as refinancing levels hit their highest point yet for 2011.
While the refinance index shot up 30.4% the seasonally adjusted purchase index declined 0.9%.
"Over the past month, refinance application volume has increased by 63%," said Mike Fratantoni, MBA vice president of research and economics. "Refinance applications for jumbo loans increased by almost 75% relative to last week. Despite these low mortgage rates, applications for home purchase have remained little changed through the summer."
The four-week moving averages for the seasonally adjusted market index rose 9.7%, while the refinance index increased 13.7%. The seasonally adjusted purchase index remained unchanged.
As refinancing activity spurred growth, the refinance share of applications shot up to 75.6% of all applications, compared to 70% the prior week.
Interests rates remained low with the 30-year, FRM falling to 4.37% from 4.45% a week earlier. The 15-year FRM remained at 3.52%.
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