HARP ReFi Program Fuels Surge in Mortgage Applications

A refinancing surge spurred an increase of 6.9 percent in overall mortgage applications compared to a week earlier, according to data from the Mortgage Bankers Association for the week ending April 13, 2012.
A revisiting of mortgage rates to record or near-record lows motivated borrowers to refinance.
Many of these borrowers took part in the Obama Administration’s revamped Home Affordable Refinance Program (HARP). So-called HARP 2.0 is for homeowners who are current on their payments but owe much more on their mortgages than their homes are worth.
Mortgage bankers surveyed said about 32 percent of their refinance volume was for HARP loans.
The mortgage bankers’ Refinance Index increased shot up 13.5 percent from the previous week.  Its Purchase Index decreased 11.2 percent from one week earlier.
Both indices are seasonally adjusted.
The refinance share of mortgage activity increased to 75.2 percent of total applications from 70.5 percent the previous week.
The adjustable-rate mortgage (ARM) share of activity decreased to 5.3 percent from 5.5 percent of total applications from the previous week.
“Renewed concerns about sovereign debt in Europe led to a drop in rates last week, with the 30-year rate tying our survey low, reached in early February,” said Jay Brinkmann, MBA’s Chief Economist and SVP of Research and Education.  “Refinance activity picked up in response, increasing 13.5 percent for the week.”
The average loan size of all loans for home purchase in the U.S. was $233,381 in March 2012, up from $225,463 in February 2012. The average loan size for a refinance was $214,593, down from $222,048 in February.
The largest purchase loans were made in the Pacific region at $ 337,227. The largest refinance loans were also made in the Pacific region at $ 290,711.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 4.05 percent from 4.10 percent.
The average contract interest rate for 30-year fixed-rate mortgages – with jumbo loan balances (greater than $417,500) – decreased to 4.36 percent from 4.43 percent.

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