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Lower Rates send Refi Activity back to January Levels
Applications for refinancing increased</bduring the week ended April 26 driving the Mortgage Bankers Association's (MBA)rnMarket Composite Index up 1.8 percent on a seasonally adjusted basis. The Index, a measure of overall mortgagernapplication volume, rose 2 percent on an unadjusted basis compared to the weekrnended April 19.</p
The Refinance Index increased 3 percent</bfrom the previous week to its highest level since mid-January retaining the samern75 percent share of applications as in the previous week. Applications for the Home AffordablernRefinance Program (HARP) constituted 34 percent of mortgage applicationsrncompared to 32 percent the week, the highest share since MBA began trackingrnHARP activity in February 2012.</p
The seasonally adjusted Purchase Indexrnwas off 1.4 percent from the level a week earlier. The unadjusted index declined 0.5 percentrnweek-over-week but was 13 percent higher than during the same week in 2012.</p
Purchase Index vs 30 Yr Fixed</b</p
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Refinance Index vs 30 Yr Fixed</p
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The jumbo 30-year adjustable mortgagern(FRM) was the only product for which the contract and effective rates increasedrnduring the week. The average rate forrnthese loans with balances over $417,500 increased to 3.80 percent with 0.29rnpoint from 3.75 percent with 0.37 point.</p
The rate for 30-year FRM with conforming</bbalances (under $417,500) fell 5 basis points to 3.60 percent with pointsrndecreasing to 0.30 from 0.41. This wasrnthe lowest rate since last December. FHA-backed 30-year FRM had an average rate during the weekrnof 3.34 percent with 0.37 point compared to 3.37 percent with 0.64 point. </p
The average contract interest rate for 15-year fixed-raternmortgages decreased to 2.84 percent, the lowest rate since December 2012, fromrn2.89 percent. Points decreased to 0.26rnfrom 0.40. </p
Four percentrnof mortgage applications were for adjustable rate mortgages (ARMs). The most popular of these, the 5/1 ARM had anrnaverage rate of 2.55 percent with 0.22 point compared to 2.62 percent with 0.21rnpoint. </p
MBA basesrnthese rate quotes on loans with an 80 percent loan-to-value ratio and pointsrninclude the origination fee.</p
ThernWeekly Mortgage Applications Survey from which this information was derived hasrnbeen conducted since 1990. Respondentsrninclude mortgage bankers, commercial banks, and thrifts. The base period and value for all indices isrnMarch 16, 1990=100.
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About the Author
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Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.
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