If the latest Mortgage Bankers Association application survey results are any indicator, the refinance business has not started to dissipate, and one observer believes it will stay strong for some time to come. For the second consecutive week, refis are driving the increase in application volume, this time up 4.8% on a seasonally adjusted basis for the week ended April 12.
However, purchase applications also had a strong week as well.
The unadjusted Refinance Index increased 5% and is at its highest level since mid-January. The seasonally adjusted Purchase Index increased 4% from one week earlier and it is at its highest level since May 2010. The MBA noted that conventional application volume increased 3% to its highest level since October 2009. On an unadjusted basis, purchase applications are up 20% when compared with the same week in 2012.
Quicken Loans chief economist Bob Walters commented, “Projections of declining refinance activity seem to be premature as rates dipped amid the Bank of Japan moving into quantitative easing, causing a rally in the bond market. Look for refinance volume to stay strong driven by historically low rates and aided by the millions of HARP-eligible underwater homeowners who still could benefit from refinancing.”
Don’t expect rates to rise anytime soon. Zillow said on Tuesday afternoon that on a real-time basis it found the average 30-year fixed rate being offered through Zillow Mortgage Marketplace fell one basis point from last week to 3.34%.
The 30-year FRM hovered between 3.41% and 3.32% for the majority of the week.
"Rates fell slightly this past week after lower-than-expected retail sales numbers raised concerns about softening consumer confidence," said Erin Lantz, director of Zillow Mortgage Marketplace. "We expect mortgage rates will remain depressed this week due to apprehension related to the Boston Marathon bombing and threats from North Korea."
The MBA said the share of refi applications remained at 75%.
The average contract rate for the 30-year conforming FRM (MBA defines this as a loan with a balance of $417,500 or under) for the survey period decreased one basis point to 3.67%. Federal Housing Administration-insured loans had an average contract rate for the week of 3.37%, a drop of six basis points from the previous week.
Jumbo 30-year FRMs saw its average contract rate decrease two basis points to 3.77%. The MBA said the rate for the 15-year FRM fell by one basis point to 2.91%.
The share of adjustable-rate mortgages remains at 5% of the week’s loan applications; the average contract rate for the 5/1 ARM decreased by one basis point to 2.57%.
Apr 18, 2013
Economist Believes Refinance Applications Will Remain Strong
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