Fencesitters See Little Incentive to Refinance at Current Rates

The Mortgage Bankers Association (MBA) today released its WeeklyrnMortgage Applications Survey for the week ending March 18, 2011. </p

The MBA’s loan application survey covers over 50% of all U.S. residential mortgagernloan applications taken by mortgage bankers, commercial banks, and thrifts. Therndata gives economists a snapshot view of consumer demand for mortgage loans. Inrna falling mortgage rate environment, a trend of increasing refinancernapplications implies consumers are seeking out lower monthly payments. Ifrnconsumers are able to reduce their monthly mortgage payment and increaserndisposable income through refinancing, it can be a positive for the economy asrna whole (may boost consumer spending. Also allows debtors to pay down personalrnliabilities faster). A trend of declining purchase applications implies homernbuyer demand is shrinking.</p

Excerpts from the Release…</p

The Market Composite Index, a measure of mortgage loan application volume,rnincreased 2.7 percent on a seasonally adjusted basis from one weekrnearlier.  On an unadjusted basis, the Index increased 2.8 percent comparedrnwith the previous week.   </p

The Refinance Index increased 2.7 percent from the previous week. The fourrnweek moving average is up 3.3 percent.  Thernrefinance share of mortgage activity remained constant at 66.4 percent of totalrnapplications.</p

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The seasonally adjusted Purchase Index increased 2.7 percent from one weekrnearlier. The unadjusted Purchase Index increased 3.0 percent compared with thernprevious week and was 15.3 percent lower than the same week one year ago. Thernfour week moving average is up 1.0 percent.</p

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The average contract interest raternfor 30-year fixed-rate mortgages increased to 4.80 percent from 4.79 percent,rnwith points decreasing to 0.96 from 1.07 (including the origination fee) for 80rnpercent loan-to-value (LTV) ratio loans.  The effective rate decreasedrnfrom last week. </p

The average contract interest raternfor 15-year fixed-rate mortgages decreased to 4.02 percent from 4.03 percent,rnwith points increasing to 0.90 from 0.85 (including the origination fee) for 80rnpercent LTV loans. The effective rate increased from last week.</p

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“Recently lower mortgage rates have done little to motivate potential refinance candidates.” said MND’s Managing Editor Adam Quinones. “This isn’t a big surprise as most qualified borrowers  simply don’t have an incentive to refinance because they already did last year when rates were near record lows.  Other than that, qualification issues continue to prevent many folks from lowering their monthly payment. We do however expect a modest increase in purchase activity heading into the spring buying season.”

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