Refinancing applications rise as rates continue to fall

WASHINGTON – Mortgage applications nationwide rose last week as more homeowners tried to refinance, the Mortgage Bankers Association reported today.
In the seven days ended Jan. 18, the trade group’s Market Composite Index – a measure of mortgage loan application volume – rose 8.3 percent from the previous week’s level to a seasonally adjusted 981.5 points, after surging 28.4 percent in the week ended Jan. 11.
Compared with the same week of 2007, the index rose 63.7 percent.
The MBA’s seasonally adjusted Refinance Index rose 16.9 percent to 4,178.2 points, slowing from the previous week’s 43.4-percent rise. Meanwhile, the Purchase Index fell 4.6 percent to 439.9 points, after rising 11.4 percent the in week ended Jan. 11.
Refinancing accounted for 66.0 percent of loan applications last week, up from the previous week’s 62.7 percent. Adjustable-rate mortgages (ARMs) increased to 9.3 percent of total applications from 9.2 percent in the week ended Jan. 11.
Interest rates continued their decline, with the rate on the average 30-year fixed-rate mortgage falling to 5.49 percent from the previous week’s 5.62 percent, while the rate on the average one-year ARM fell to 5.51 percent from the previous week’s 5.77 percent
“Refinance applications are up 92 percent since the beginning of November and purchase applications are up 7 percent,” noted Jay Brinkmann, the MBA’s vice president of research and economics.
“With tighter credit conditions, we do not know how many of these applications will become loans, but it is clear that borrowers are responding to the 40- to 80-basis-point drop in rates we have seen since Nov. 2.”
The Mortgage Bankers Association, based in Washington, D.C., is a trade group representing the real estate finance industry. Its 3,000 member companies include mortgage firms, commercial banks, thrifts, life insurance companies and others. Additional information, including the MBA’s Weekly Application Survey, is available at www.mortgagebankers.org.