The two sides of the mortgage market have been headed in
opposite directions lately, with applications for home purchase
mortgages increasing even as refinance demand has declined.
Applications for mortgages to buy a home were up a seasonally
adjusted 4.4 percent last week and have increased by 12 percent
over the past month, according to figures released today by the
Mortgage Bankers Association.
At the same time, mortgage refinance applications fell by 4.1
percent for the week for the fourth consecutive weekly decline.
Refinance applications have dropped an average of 3.29 percent a
week over that period.
HARP activity increasing
The drop in refinance demand has occurred despite mortgage rates
holding steady near historic lows and recent changes to the
government's Home Affordable Refinance Program (HARP) that are
designed to make it easier for underwater homeowners to refinance
However, HARP refinances have been increasing as a share of
mortgage refinance volume, according to MBA economist Mike
Frantoni, making up nearly one-third of refinance applications over
the past two weeks.
Refinances made up 75.1 percent of all mortgage applications
last week, down from 77.0 percent the week before.
Rates hold steady
Mortgage rates generally held steady last week, with some
variation among different loan types. Average interest rates on
conforming 30-year fixed-rate mortgages (balances below $417,500)
and 15-year fixed-rate mortgages were unchanged at 4.06 percent and
3.36 percent, respectively, with small declines in origination
points to 0.43 points and 0.34 points, respectively.
The biggest change was on 30-year fixed-rate FHA mortgages,
where average interest rates fell to 3.82 percent, down from 3.87
percent the week before, with origination fees falling to 0.55
points, down from 0.70 percent the week before. The drop appears to
be related to recently announced reductions in fees for FHA
streamlined mortgage refinances.
Average interest rates on jumbo mortgages (above $417,500) rose
to 4.39 percent, up from 4.33 percent the week before, with
origination fees barely down slightly to 0.39 points. Meanwhile,
average initial rates on 5/1 adjustable rate mortgages (ARMs) rose
to 2.81 percent, up from 2.78 percent previously, with origination
costs rising slightly to 0.37 points.
All rates on based on mortgages with an 80 percent loan-to-value
ratio. Figures are for the week ending Friday, March 9.