Refinancing rates slow as mortgage rates tick up
The Mortgage Bankers Association (MBA) reports that applications for a home refinance decreased by 16.6 percent during the week ending Oct. 14 compared to the previous week, in part because of a slight rise in mortgage rates.
While homeowners apply for a home refinance when mortgage rates are low, the extended period of low rates has slowed the pace of refinancing. Those homeowners who have the creditworthiness and the home equity to refinance have are likely to have already refinanced their home loans. Those with low equity or credit problems or too much debt have been unable to take advantage of these continued low rates.
The MBA says that while mortgage applications for refinancing represented 77.6 percent of all applications last week, this was a decline compared to the 79.1 percent share of the market during the previous week.
Mortgage rates and refinancing
According to HSH.com, mortgage rates on a 30-year fixed-rate home loan averaged 4.46 percent during the week ending October 14, while 15-year fixed-rate home loans averaged 3.76 percent. FHA home loans, often popular with homeowners who want to refinance and have low equity, rose above four percent last week. FHA loans, while they require mortgage insurance, allow homeowners to refinance with as little as 2.75 percent equity in their property as long as they meet credit and debt-to-income ratio requirements.
HSH.com says that mortgage rates ticked upward slightly because of a minor improvement in economic news including a small increase in retail sales, more hope for a resolution of the European debt crisis and stable unemployment reports in the U.S. Mortgage rates are impacted by a variety of factors, but they do tend to drop lower when economic news is bad and rise on better economic news.
Last week’s mortgage rates, while they rose slightly, matched rates that were identified as historic lows a few weeks ago. For homeowners with the enough equity and good enough credit, a small rise in mortgage rates should not deter a plan to refinance.
