Record Low Rates Lift Mortgage Refinancing to 15-Month High

Mortgage applicationsMortgage refinancing activity has bounced back to a 15-month high as borrowers are taking advantage of record-setting low fixed rates, according to the Mortgage Bankers Association’s weekly survey released today.
The MBA’s overall market composite index, covering purchase and refinance applications, increased 2.7 percent last week, compared to a week earlier.
The increase was mostly driven by the refinance component, which moved up 2.8 percent to its highest level since May 1, 2009.
“Refinancing activity picked up again last week, reaching new 15-month highs, as borrowers took advantage of even lower mortgage rates.  The drop in mortgage rates was in line with Treasury rates as the latest data continue to show weak economic growth and an exceptionally weak housing market,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. 
Fratantoni said the sharp decline in the MBA’s purchase application index in May “had provided a clear leading indicator of the drops in new and existing home sales that were reported for June and July.”
Despite the slight increase in purchase activity in the past week, the MBA does not expect an increase in new home sales reported for August or existing home sales reported for September.
The MBA reports that average contract interest rate for 30-year fixed-rate mortgages decreased to 4.43 percent last week, from 4.55 percent — with points increasing to 1.34 from 0.89 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The contract rate is a new low for the MBA’s survey.
Also see: Mortgage Fixed Rates Still Setting New Lows: 30-Year at 4.36%

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