MBA Says Low Rates Boost Refi Applications
Mortgage application volume surged last week on increased borrower interest in refinance mortgages, which may have been triggered by the historically low interest rates experienced in the market, the Mortgage Bankers Association (MBA) said. MBA’s market composite index of gross mortgage applications increased 8.5% on a seasonally adjusted basis for the week ending December 4. Last week’s results were adjusted to take into account the shortened holiday week. MBA’s refinance index increased 11.1% from the previous week and refinance applications accounted for 74.4% of all applications, up from 72.1% in the previous week. MBA’s purchase index increased 4%. Government purchase applications experienced a 10% increase in volume, while conventional purchase applications declined 0.2%. Adjustable-rate mortgage (ARM) applications accounted for 4.7% of application volume, down from 4.8% in the previous week. Last week, multiple interest rate surveys hit record lows, and MBA said that may be the cause for the jump in application volume. The Mortgage Maxx index of application volume that’s adjusted to reflect the number of households applying for mortgages decreased 4.9% in the week ending December 4, compared to the previous week. The index was also adjusted for the holiday week. Mortgage Maxx projects its index will continue to decline through the balance of the year, due to less demand during the December holidays. Mortgage Maxx added the low rates should have a greater impact on application business. “[T]he real problem here is that the Fed’s transfusions aren’t getting to the housing muscle. Rates this low in the past would have caused a refi and home-buying stampede,” the Mortgage Maxx report said. “This time, with average mortgagors trapped by dissolving equity and dismally lethargic housing, the efficacy of Dr. Ben [Bernanke] et al’s prescriptions remain wanting.” Write to Austin Kilgore.