Low mortgage rates drive rush to refinance
Mortgage refinance applications surged for the second week in a row, according to the Mortgage Bankers Association (MBA), fueled by a drop in mortgage rates.
The MBA’s Weekly Mortgage Applications Survey showed that refinance applications increased by 9.3 percent during the week ending December 9, 2011 compared to the previous week. This represents the highest level of home refinance applications since November 4, 2011. The refinance share of all mortgage applications rose to 79.7 percent.
According to HSH.com, the average rate for a 30-year fixed-rate home loan was 4.31 percent, while mortgage rates for a 15-year home loan dipped to 3.62 percent. Rates on a 5/1 adjustable rate mortgage dropped to 3.09 percent.
Mortgage refinance rates in 2012
Economists are looking back at the volatile U.S. economy of 2011 and developing forecasts for 2012. Most economists assume mortgage rates will stay low, at least in the beginning of the year.
“Thirty-year fixed-rate conforming mortgages have hovered around 4.0 percent (or lower) during the fourth quarter to-date thanks in large part to the Federal Reserve’s Maturity Extension
Program and its stated intent to push and keep long-term rates low,” says Frank E. Nothaft, chief economist of Freddie Mac. “The program (a.k.a. ‘Operation Twist’ by the popular press) is expected to last until mid-2012. This should keep fixed-rates for 15- through 30-year product relatively low during the first half of the year, with rates edging up during the second half.”
If you are considering the potential financial benefits of refinancing into a shorter term loan or a new 30-year fixed-rate home loan, you may want to take steps to apply now or early in 2012 for a refinance in case mortgage rates rise later in the year.
