Our Blog

Refinance applications surge as rates dip again

Mortgage application volumes, and particularly those for refinances, have taken a pretty significant hit over the last year or so, thanks in large part to rates that have hovered slightly above the record-low levels seen just a few years ago. However, recent declines in mortgage rates seem to be drawing more people back into the fold, and could serve as good news for origination levels going forward.

In all, the total number of home loan requests filed in the week ending Oct. 10 surged 5.6 percent over the previous seven-day period, completely driven by a surge in refinance interest, according to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association. In all, refinance requests were up 11 percent on a seasonally adjusted basis, while those for purchases fell 1 percent. Further, purchase requests were also down 4 percent annually.

As a result of these changes, the share of the mortgage market taken up by refinance requests leapt to 59 percent from the previous week's 56 percent, the report said. That's the highest level seen since February. Further, the portion of the market taken up by adjustable-rate mortgages likewise climbed, back to 8 percent for the first time in weeks.

How did rates affect applications?
It seems that at least part of the reason for the increase in applications was that rates continued to fall, sliding to 4.2 percent for 30-year fixed-rate loans, down from the previous week's 4.3 percent, the report said. That was the lowest level seen in nearly a year and a half. Meanwhile, those for 15-year FRMs slipped to 3.41 percent (the lowest since July) from the previous 3.48 percent.

"Growing concerns about weak economic growth in Europe caused a flight to quality into US assets last week, leading to sharp drops in interest rates," said Mike Fratantoni, MBA's chief economist.  "Mortgage rates for most loan products fell to their lowest level since June 2013. Refinance application volume reached the highest level since June 2014 as a result, with conventional refinance volume at its highest since February 2014."

If rates continue to hold at relatively low levels, it might be wise for lenders to do more to highlight that lingering affordability can provide very good deals to buyers and refinancers alike for at least a little while longer. However, rates are also expected to rise sharply over the next several months, and as such, the sooner buyers can get into the market, the better off they're likely to be.

By: Equity National   October 15, 2014     Closing

0 Comments

Add new comment

Add a Comment