Mortgage Apps Fall 7% as FHA Refinancing Eases

Mortgage applications fell 7.1 percent last week compared to the previous week after a pullback by those refinancing mortgages backed by the government, according to the Mortgage Bankers Association.
The refinance component of the group’s Market Composite Index fell slightly more, with an 8 percent decrease based on surveys for the week ending June 22.
Price cuts to the Federal Housing Administration’s mortgage insurance premiums took effect June 11, creating a surge two weeks ago in refinancing among the millions of borrowers whose mortgages are currently insured by FHA.
Beginning June 11, 2012, FHA lowered its Upfront Mortgage Insurance Premium (UFMIP) to just .01 percent and reduced its annual premium to .55 percent for certain FHA borrowers.
“Refinance volume fell last week due largely to a fall-off in refinance applications for government loans, which had more than doubled the prior week,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.
The big swings in refinancing activity were primarily a result of the FHA’s new premiums on streamline refinances, he said.
The refinance share of mortgage activity decreased to 79 percent of total applications from over 80 percent the previous week. The adjustable-rate mortgage (ARM) share of activity is about 4 percent of total applications.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 3.88 percent from 3.87 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) increased to 4.12 percent from 4.06 percent, for 80 percent LTV loans.

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