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| Loan applications jumped as more consumers started the refinancing process. The jump in mortgage activity is the result of some pretty low rates — which should hold until summer.
Overall mortgage applications surged 25.6% from the previous week, bringing the Market Composite Index to 1117.1 — the highest level since July 2003. According to the latest Weekly Mortgage Applications Survey by the Mortgage Bankers Association of America (MBA), the measure stood at 1673.4 last year at this time. The increase was fueled by the 39.7% jump in refinance applications, which brought the Refinance Index to 4983.7, the trade group reported. The refinance share of total mortgage applications increased to 62.8%, from 56.1% the previous week. Meanwhile, the Purchase Index increased by 5.6% to 452.4, said the MBA. “We have been expecting a sharp up tick in refinance applications as borrowers became more aware of the low rates now available,” said Jay Brinkmann, the group’s vice president of research and economics. “Keep in mind, however, that even with this surge in refinance applications, the share of applications for adjustable rate mortgages is staying the same at almost 28 percent of applications and over 42 percent of the dollar volume. This means that a sizable percentage of these refinance applications are for adjustable rate loans.” The popularity of ARM applications is in line with the low averages the program has been experiencing; the average 1-year Treasury-indexed ARM was 3.39% this week — a two basis point drop from last week and the lowest its been since January 1984, according to Freddie Mac’s latest survey of 125 lending institutions. As for long-term rates, Freddie averaged the 30-year fixed-rate mortgage average this week at 5.38%, down 3 basis points from last week. Around this time last year, the 30-year averaged 5.79%. The 15-year remained unchanged from last week at 4.69%, said the government sponsored enterprise. Even if long-term rates rise in the following weeks, Freddie forecasts that the 30-year annual average this year will be around 5.75%, well below the 33-year historical average. And Fannie Mae economists recently said they don’t expect rates to creep up until the second half of the year. Meanwhile, 42% of the mortgage panel surveyed by Bankrate.com said rates would remain unchanged over the next month and a half, while another 42% forecast an upturn and the remaining 16% predicted a downturn. Several panelists commented that the direction of rates will be more clearly defined after April’s employment report. |
Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.
email:Â s3celeste@aol.com
