Interest-Rate Drops Spur Refinance Applications

by refinance activity, the Mortgage Banker's Association's (MBA) Market Composite Index last week increased 7.6% on a seasonally adjusted basis from one week earlier. The refinance index increased 8.6% from the previous week and was the highest Refinance Index observed in the survey since the week ending May 15, 2009. The increase in total refinance applications included a 10.7% increase in conventional refinance applications and a 4.2% decrease in government refinance applications. The seasonally adjusted purchase index increased 3.4% from one week earlier, driven by an 8% increase in government purchase applications. Conventional purchase applications were essentially flat, the MBA says, increasing just 0.3% from the week before. Michael Fratantoni, the MBA's vice president of research and economics, notes that while the refinance index is up nearly 30% over the past month, it is still considerably lower than its peak observed last spring. "Refinance borrowers, aiming for the lowest possible rate, are getting conventional loans,’ Fratantoni says. ‘The strength in purchase applications comes from government loans, likely indicating that prospective buyers are drawn by the lower down-payment requirements." The refinance share of mortgage activity increased to 79.4% of total applications from 78.7% the previous week. SOURCE: [link=]Mortgage Bankers Association


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