Rush to refinance is on
Mortgage rates dropped during the week ending July 19 according to the HSH.com Weekly Mortgage Radar, and refinancing applications surged.
The Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 15 showed a 23.1 percent increase in the number of mortgage refinance applications over the previous week. In addition, the overall mortgage applications volume increased by 15.5 percent over the previous week.
The refinance share of mortgage applications increased to 70.1 percent of all applications, the highest proportion since January 21.
Refinance rates lower
“Ongoing turmoil in the financial markets primarily due to the sovereign debt crisis in Europe has brought mortgage rates back to their lowest levels of the year,” said Michael Fratantoni, MBA’s vice president of research and economics. “Refinance applications have surged in response and the refinance index is at its second highest level of the year. One factor that may be contributing to this increase is that borrowers potentially impacted by impending decreases in the conforming loan limit may be opting to lock in fixed-rate financing now.”
Unless Congress acts to revise the rules, conforming loan limits are set to drop on October 1.
Mortgage refinance surge
While bad economic news often translates into lower mortgage rates, it can be difficult to predict future rates when reports offer mixed messages about the future of the U.S. economy.
“After a brief run higher, great mortgage rates are again back in the market, pushed there mostly by poor economic data,” said Keith Gumbinger, vice president of HSH.com. “If you’ve been sitting on the fence contemplating a refinance, it’s a good time to take action, since markets will likely turn more volatile as we come up against the U.S. debt limit deadline in a few weeks’ time.”
When mortgage rates are historically low as they are now, most analysts predict they will start to rise as the economy improves.
