Buying a Home | Financing | LendingTree
Wave of Refinances as Mortgage Applications Rise
By Craig Grella
As rates dropped below 5 percent over the first two months of the year, mortgage refinance volume increased and purchase volume remained unchanged. In its market composite index (a measure of mortgage loan application volume) the Mortgage Banker’s Association (MBA) reported refinance volume increased 1.8 percent over the previous month and purchase loan volume decreased 2.7 percent over the same period.
The data is in line with the recent release of the Case-Shiller Index and a joint report by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD), the latter of which showed sales of new single-family homes down 11.2 percent in January 2010. The lack of sales accounts for the recent drop in demand for purchase loans, which is expected to continue until the level of housing supply, currently at 9.1 months, is worked off.
Meanwhile, the MBA index shows refinance loans currently comprise 69.1 percent of total loan applications, up 1 percent from the previously recorded level. The survey also shows loan points for a 30-year fixed-rate mortgage decreased to 0.99 from 1.34 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. Fees on shorter term loans, like the 15-year fixed-rate mortgage, increased to 1.36 from 1.31 for 80 percent LTV loans.
Photo Credit: Flickr-Dwonderwall
