Refinance Mortgage Applications Fall 14%, Lowest in 6 Weeks

Refinance Mortgage Applications Fall 14%, Lowest in 6 WeeksDespite interest rates still hovering near record lows and a fresh batch of Federal Reserve action, mortgage applications decreased overall 12.3 percent, with refinancing dipping down to its lowest level since Nov. 2, according to the Mortgage Bankers Association.
The bankers’ Market Composite Index, a measure of mortgage loan application volume for both refinancing and purchasing, decreased 12.3 percent on a seasonally-adjusted basis last week from one week earlier.
The Refinance Index decreased 14 percent from the previous week.
“Despite the Federal Reserve’s announcement last week that it would purchase an additional $45 billion in Treasury securities per month as part of its continuing quantitative easing effort, rates increased in the second half of the week,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “As a result, refinance applications dropped sharply to the lowest level in over a month.”
The refinance share of mortgage activity decreased to 83 percent of total applications, from 84 percent the previous week. The HARP share of refinance applications fell to 25 percent. HARP (Home Affordable Refinance Program) is the government-sponsored effort to help “underwater” borrowers refinance if their loans are held by Fannie Mae or Freddie Mac.
The average contract interest rate for 30-year fixed-rate mortgages, with conforming loan balances ($417,500 or less) increased to 3.50 percent from 3.47 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 3.73 percent, the lowest rate in the history of the survey, from 3.77 percent, for 80 percent LTV loans.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.34 percent from 3.32 percent, for 80 percent LTV loans.

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