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Home refinance applications up

The Mortgage Bankers Association (MBA) Weekly Mortgage Applications Survey for the week ending June 3, 2011 showed that applications for a mortgage refinance increased by 1.3 percent over the previous week. Overall, mortgage applications dipped slightly by 0.4 percent over the previous week, even as mortgage rates remained low. The refinance share of activity increased to 67.3 percent of all mortgage applications, the highest home refinancing share of applications since January 28, 2011.

The slow-down in home purchase loans is part of the general slowdown in the economic recovery, with reports coming in last week about dipping home prices across the country, a drop in consumer spending and an unexpectedly low report on job creation.

Unemployment and mortgage loans

The Labor Department reported on Friday, June 3, that employers hired just 54,000 new employees in May, the lowest number of new jobs created in eight months. Economists in a Bloomberg News survey had predicted an increase of 165,000 jobs in May. At the same time, unemployment rose again slightly to 9.1 percent.

Unemployment can impact home refinancing in two ways. On the negative side, homeowners impacted by a job loss or a reduction in income will find it difficult, if not impossible, to refinance. If you anticipate a lay-off in your future, it may be a wise move to refinance as soon as possible to reduce your monthly housing payments as much as possible.

On the positive side, if it can be called “positive”, a weak economy and high unemployment rates are likely to be a factor in keeping interest rates, and therefore mortgage rates, low. While there are a number of issues that impact mortgage rates, in general, a soft economy is likely to be accompanied by low mortgage rates.

For the week ending June 3, HSH.com says the average fixed-rate 30-year mortgage rate was 4.81 percent with 0.27 points and the average 15-year fixed-rate loan was 4.08 percent with 0.25 points. Both of those rates are lower than the previous month and the previous year.

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