Refinance Interest Slips as Rates Increase
Interest in refinance mortgages continued to fall in the week ending May 29, despite a growing ratio of delinquent mortgages to 5.2% of total mortgage loans in Q109. Applications filed for refinance loans slipped 24% from last week, according to a survey released today by the Mortgage Banker's Association (MBA). Refinance applications accounted for 62.4% of total applications this week, from 69.3% a week earlier. The total volume of mortgage applications fell 16% in the week ending May 29, according to the MBA. Without the adjustment for the Memorial Day holiday, the decline more than doubles to -32.5%. Unadjusted, the index sits 14.4% below year-ago levels, the MBA found. The slip in overall interest might have something to do with increasing mortgage rates, which the MBA also tracks in its weekly survey. Thirty-year fixed-rate mortgages averaged a 5.25% interest rate this week, 44 bps up from 4.81% last week, marking the largest weekly increase since October '08, the MBA said. The average rate seen among 15-year fixed-rate mortgages came in at 4.8% this week, from 4.44% last week. A separate application survey, conducted by Mortgage Maxx, found application activity adjusted to count multiple submissions from a single household as one participant fell 12.5% in the same week. Household application activity fell 15.5% in California alone, according to the Mortgage Application Index -- or MAX. MAX publisher, Paul Descloux, in his weekly commentary on the index, warns application activity may have passed its high mark for the year as mortgage rates continue to inch up, despite the Federal Reserve's quantitative easing efforts. "As home sales reach their perennial peak, it will be up to REO and refinancings to push the MAX higher," he writes. "But as some credit spreads narrow and benchmark rates move higher, refinancings and maybe even home sales pick up some more headwinds." Write to Diana Golobay.