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Refinancing Activity Continues to Shrink as Rates Jump to Recent Highs

by devteam June 5th, 2013 | Share

Therernwas another substantial drop in mortgage applications during the weekrnended May 31 as rates increased, in some cases to 13 month highs. The Mortgage Bankers Association (MBA) said results of its WeeklyrnMortgage Applications Survey showed an 11.5 percent decrease in itsrnMarket Composite Index, a measure of mortgage volume, on a seasonallyrnadjusted basis from the week ended May 24. The Composite was down 20rnpercent on a non seasonally adjusted basis. </p

ThernRefinance Index decreased 15 percent from the previous week and is atrnits lowest level since the end of November 2011.  Thernrefinancing share of mortgage applications dropped from 71 percentrnthe previous week to 68 percent, the smallest share since early Julyrn2011 and the fourth straight week it has declined. Refinancingrnthrough the Home Affordable Refinancing Program (HARP) held itsrnground with a 32 percent share of refinancing – a percentage thatrnhas not changed for three weeks. </p

Thernseasonally adjusted Purchase Index decreased 2 percent from one weekrnearlier. The unadjusted Purchase Index was down 13 percent comparedrnwith the previous week and was 14 percent higher than the same weekrnone year ago.</p

Ratesrnfor the conforming 30-year fixed-rate mortgage (FRM) had the biggestrnsingle-week increase since July 2011, jumping from 3.90 percent torn4.07 percent, the highest rate since April 2012. Points decreased torn0.35 from 0.39. </p

Thernaverage rate for 30-year jumbo FRMs (loan balances greater thanrn$417,500) increased by 13 basis points to 4.20 percent, the highestrnrate since May 2012. Points increased to 0.28 from 0.27.</p

FHA-backedrn30-year FRMs also increased to the highest level since May 2012, 3.76rnpercent, from 3.62 percent the previous week. Points increased torn0.32 from 0.27.  The rate for 15-yearrnFRMs reached the highest level since June 2012, increasing to 3.23rnpercent with 0.38 point from 3.10 percent with 0.30 point. </p

Thernaverage contract interest rate for 5/1 adjustable rate mortgagesrn(ARMs) increased to 2.76 percent, the highest rate since June 2012,rnfrom 2.60 percent,<bwithrnpoints increasing to 0.41 from 0.24. The share of ARM activityrnincreased to 6 percent of total applications. </p

Ratesrnquoted are for loans with an 80 percent loan-to-value ratio andrnpoints include the origination fee. The effective mortgage rate alsornincreased for all of the loan types listed above. </p

MBA’srnsurvey covers over 75 percent of all U.S. retail residential mortgagernapplications, and has been conducted weekly since 1990. rnRespondents include mortgage bankers, commercial banks and thrifts. rnBase period and value for all indexes is March 16, 1990=100.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.

About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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