The Real Deal Miami

Refinancing apps up as mortgage rates sink to record lows: MBA

July 21, 2010 12:45PM

Mortgage application volume rose 7.6 percent last week as interest
rates declined to record lows, according to data from the Mortgage
Bankers Association through July
16. Refinancing applications rose 8.6 percent week-over-week to their
highest level since mid-May 2009, while purchase applications rose 3.4
percent from one week earlier.

The uptick in refinance
applications was driven by a demand for conventional loans — up 10.7
percent — while government refinance applications declined by 4.2
percent. Meanwhile, applicants angling to take out loans for purchases
increasingly looked to government loans, which were up 8 percent
amongst that group. Conventional purchase applications rose just 0.3
percent week-over-week.

The increase in mortgage loan activity
comes as interest rates reached record lows. The average contract
interest rate for 30-year fixed-rate mortgages hit 4.59 percent last
week, its lowest value ever recorded in the MBA survey, and the 15-year
fixed-rate mortgage declined to a 4.05 percent interest rate, also a
record low.

“Refinance borrowers, aiming for the lowest possible rate, are getting
conventional loans. The strength in purchase applications comes from
government loans, likely indicating that prospective buyers are drawn
by the lower down payment requirements,” said Michael Fratantoni, vice president of research and economics for the MBA. TRD