Mortgage Refinancing Applications Up 42 Percent, MBA Says
Mortgage applications nationwide, consisting of new home mortgage loan and mortgage refinancing, soared 32 percent in the third week of March. It was the third straight week mortgage applications rose, as lower mortgage rates attracted more mortgage refinancing and encouraged new home purchases.
According to the Mortgage Bankers Association, its index of mortgage applications rose to 1,159.4 in the third week of March from 876.9 the second week. The mortgage refinancing index rose by 42 percent while the mortgage purchase index rose by 4.2 percent.
The big gain in MBA’s mortgage refinancing gauge was largely a result of the record low level of interest rates for fixed-rate 30-year loans, enticing lots of homeowners to refinance to lower their monthly payments.
Even so, Patrick Newport, economist of Massachusetts-based IHS Global Insight Inc., said the declining mortgage rates will increase demand for home loans, but will not stem foreclosures. The continuing corporate downsizing, business closures and job cuts have been increasing foreclosure filings and loading more foreclosed properties into the market.
The MBA’s home purchase index rose to 267.8 in the third week from 257.1 the prior week. The mortgage refinancing gauge soared from 4,497.6 to 6,363.2 in the third week. The number of mortgage refinancing applicants in comparison to total mortgage applications rose from 72.9 percent to 78.5 percent of all applications.
The average rate for a fixed-rate 30-year mortgage loan dropped to 4.63 percent, the lowest rate since the MBA started recording rates in 1990. Meanwhile, the average rate for a fixed-rate 15-year mortgage loan fell to 4.48 percent, the lowest rate since 2003.
MBA’s mortgage loan and mortgage refinancing survey covers about 50 percent of all retail home mortgage originations in the country. MBA predicted that home loan originations will increase to $2.78 trillion in 2009 while home purchase originations will increase to $1.96 trillion. While mortgage refinancing in March had greater increases than purchase originations, the predicted increases for the whole of 2009 show more increases in purchase originations.
To hasten the rejuvenation of the mortgage market, the Federal Reserve announced last week its plan to increase its acquisition of mortgage-backed securities by up to $750 billion, in addition to the $500 billion already allocated for the first half of 2009. The central bank will also purchase up to $300 billion Treasury notes during the second half of the year. These efforts are all designed to help President Obama achieve the goals of its economic stimulus program.
