Mortgage applications rise on refinance wave
The number of mortgage applications rose 21% last week to the highest level in more than a month as refinancing rebounded.
The Mortgage Bankers Association’s index rose to 620.7 in the week ended January 29, 2010 from 513 in the prior week.
Mortgage refinancing index increased 26%, while the mortgage purchase index rose 10%.
The government’s tax credit is luring home buyers who have been sitting on the sidelines waiting for some signs of stability.
Qualified borrowers who sign purchase contracts by April 30, 2010 and close on loans by the end of June can get an $8,000 first-time buyer credit or $6,500 move-up credit.
Home buyers may also be trying to get a jump on a possible increase in mortgage rates after Federal Reserve policy makers announced to wane down purchasing mortgages by March 31, 2010.
The rise in mortgage rates is seen as gradual this year with the Federal Reserve committing to keeping interest rates low for an extended period. However, there may be greater urgency by borrowers to refinance mortgages now because the door to cheap mortgage money may close.
Affordability remains high with mortgage rates still historically low and average home prices plunging about 30% from 2006 peaks.
30-year fixed-rate mortgages was 5.01% last week, off from 5.02% the previous week.
15-year fixed-rate mortgages averaged 4.33%, off from 4.34%
1-year ARMs carried an average rate of 6.70%, down from 6.84%.
To obtain the rates, the 30-year fixed-rate mortgage required payment of an average 1.04 points, the 15-year fixed-rate mortgage required an average 1.17 points and the one-year ARM required an average 0.34 point. A point is 1% of the mortgage amount, charged as prepaid interest.
Mortgage Refinancing
The share of mortgage applicants seeking to refinance a home loan rose to 69.2% of all applications filed last week, up from 67.6% the previous week. Adjustable-rate mortgages accounted for 4.5% of applications, down from 4.7%.
The Washington-based Mortgage Bankers Association’s loan survey, compiled every week, covers about half of all U.S. retail residential mortgage originations.
