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Mortgage application volume jumps, refinances up 22%

Applications for mortgage refinancing skyrocketed this week, as concerns about the economy continue, and homeowners continue to lean on HARP refinance loans.

mortgage trends

Mortgage application surge – refinances boom

According to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 13, 2012, mortgage applications skyrocketed 16.9 percent from the week prior, on a seasonally adjusted basis, while on an unadjusted basis, the Market Composite Index rose 46 percent for the week.

The Refinance Index rose 22 percent from the previous week, hitting its highest level in a month, while the Purchase Index dropped 0.1 percent in the same period, bucking several weeks of increases, dropping 3.0 percent from the same week in 2011.

“Refinance application volume increased last week to near peak levels for the year as mortgage rates dropped to a new low, driven down by growing concerns about the health of the US economy,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “Applications for HARP refinance loans accounted for 24 percent of refinance activity last week, in line with the HARP share for the past few weeks.”

Four out of five mortgages applications are refinances

The refinance share of mortgage activity increased to 80.1 percent of total applications, up from 77 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 4.1 percent of total applications.

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The MBA reports that in June, purchase and refinance applications together increased most dramatically in the West South Central region, rising 22.0 percent in purchase applications, and a shocking 63.7 percent in refinance applications.

Current mortgage rates

According to the MBA:

  • “The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.74 percent, the lowest rate in the history of the survey, from 3.79 percent, with points increasing to 0.45 from 0.36 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 3.98 percent, the lowest rate in the history of the survey, from 4.05 percent, with points decreasing to 0.32 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.55 percent, the lowest rate in the history of the survey, from 3.63 percent, with points increasing to 0.44 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.12 percent, the lowest rate in the history of the survey, from 3.15 percent, with points increasing to 0.48 from 0.43 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 5/1 ARMs remained unchanged at 2.71 percent, matching the lowest rate in the history of the survey, with points increasing to 0.51 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.”

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

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