Mortgage rates now aren't as low as they were earlier in the week, or even where they were to end last week, but the recent press over historically low mortgage rates has driven a veritable refi boom for participants in the primary mortgage markets. The Mortgage Bankers Association
said Wednesday morning that its weekly survey of application activity surged a seasonally adjusted 48 percent last week compared with the previous week, with refinancing applications driving 83.2 percent of all applications.
That's up 124.6 percent from year-ago levels, and more than a five year high in application volume, according to the MBA statistics. Refi applications rose 62.6 percent, while purchase applications rose a seasonally-adjusted 10.6 percent.
But caution should be applied to the numbers, at least in terms of attempting to translate the surge in applications into forward demand for mortgages -- that's because a good number of borrowers in this case appear to be serial applicants, if data from New York-based Mortgage Maxx LLC
is any indication. The firm's MAX index, which corrects for multiple applications coming from a single household, found that adjusted applications rose a much more modest 1.4 percent for the week ended Dec. 12. Likewise, a separate sub-index of California application activity rose 1.4 percent last week as well -- given the state's importance in the overall mortgage market, often application trends in the state can affect the overall applications reading.
Nonetheless, it's clear that mortgage brokers and bankers are being faced with a flood of refinancing activity, one that most suggest a much-changed industry is ill-equipped to manage right now. Among some of the concerns gaining coverage recently is an apparent lack of available warehouse credit needed to fund and close the mortgage refis, even if borrowers qualify. See earlier HW story
“[I'm] not sure what mortgage companies are going to do, but there is no way all these loans will get funded any time soon with no warehouse money,” said one of HW’s sources, a mortgage banker who spoke on condition of anonymity. The MBA has created a task force this month in an effort to address the issue with Treasury officials.
Beyond available funding, other originators tell HW that most lenders no longer have the capacity to underwrite files in 30 days, given the gutting of staff that's taken place at those firms that have managed to stay afloat through the market turmoil. And, of course, mortgage rates today are never what they were last week: at least, not in this mortgage market. We consistently receive emails from loan officers and brokers about mortgage rates whenever we publish a rate survey, who complain rates are never anywhere close to what the surveys suggest when published.
And while rates continued to fall according to the MBA, with the average rate on a 30-year fixed-rate loan dropping to a reported 5.04 percent last week -- the lowest average in more than five years -- rates Wednesday are no longer at that level, sources in the field said, and have been increasing as of late.
"How scared are lenders of the uptrend in rates? Even 90 minutes AFTER market close, today they were still issuing new, worsened rate sheets," one originator said earlier this week. That said, rates appear to have headed slightly lower early Wednesday, compared to Tuesday.
For more information, visit http://www.mortgagebankers.org
Paul Jackson at firstname.lastname@example.org