Refinancing Wave Spurs 9% Jump in Mortgage Applications

Propelled by a wave of refinancing at record low interest rates, mortgage applications surged 9.2 percent last week from one week earlier, according to data from the Mortgage Bankers Association.
The refinance component of the group’s overall index measuring applications jumped 13.0 percent from the previous week, while applications for purchases decreased 2.4 percent.
The refinance share of mortgage activity increased to 74.9 percent of total applications from 72.1 percent the previous week.
The group’s Market Composite Index, a measure of overall mortgage application volume, increased 9.2 percent on a seasonally adjusted basis
“A flare up of the sovereign debt troubles in Europe once again led investors to flee to the safety of U.S. Treasury securities last week.  As a result, mortgage rates have reached new lows in our survey, and refinancing application volumes picked up substantially as a result,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.
Mortgage bankers surveyed said that the refinancing surge was not due primarily to HARP (Home Affordable Refinance Program) volume from the Obama Administration’s revamped effort to help underwater borrowers.
The HARP share fell to 28 percent of refinance applications, down relative to last week and last month, when the share was just above 30 percent in April.
The increase in refinance activity last week was concentrated in the conventional sector, which was up around 14 percent for the week, while government refinance applications were up only 4 percent.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.96 percent, the lowest rate in the history of the survey, from 4.01 percent, for 80 percent loan-to-value ratio (LTV) loans.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 4.20 percent, also the lowest recorded rate, down from 4.29 percent, for 80 percent LTV loans.

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