“For a long time we had very few refinance applications” and about an 80%/20% purchase-refi mix, respectively, said Jean Badciong, SVP, COO, Inlanta Mortgage Inc. But that has changed since rates have dropped. “We’re right now running 35%-40% refinance,” she told this publication.
The refinance share of mortgage activity increased to 64% of total applications from 63% the previous week in the MBA’s index.
On an unadjusted basis, the MBA’s overall index increased 1%. Refinances jumped 3% and are at their highest level since the week ending Aug. 9. Seasonally adjusted purchases decreased 1%, while unadjusted purchases also decreased 1% week-to-week, and were 6% lower than the same week one year ago. For the second consecutive week, unadjusted purchases were lower compared to the same week one year ago.
While the index reflects a slight drop in purchases, Badciong said they remain steady at her company.
John Walsh, president, Total Mortgage Services, also said purchase business remains steady.
"However we are currently experiencing a pickup in refinancings," he added. "Overall, business has increased due to the recent decline in interest rates, as well as borrowers adjusting their expectation to the fact that rates probably are not going to decline to the levels they were six months ago. If the numbers make sense for any borrower to refinance today, they should take advantage of the opportunity before it is too late.”
“The purported increase in the purchase market has been skewed by the decline in the refi business due to interest rate increases that started in May 2013," said Mark Greco, president, 360 Mortgage. "Obviously when the refi volume falls, the percentage of purchase business increase even if purchase volume remains the same. This is exactly where we believe the purchase market is at this time.
"Anytime rates rise it will curb borrowers’ appetite for financing in general, either for refinancing or purchase. With the government shutdown, there is a good chance that this could cause an economic slowdown and we will cause rates to decline. If that happen, we are confident that it will result in a pickup in both refinance business as well as purchase business," he said.
The refinance share of mortgage activity increased to 64% of total applications from 63% the previous week. The adjustable-rate mortgage share of activity was unchanged at 6% of total applications.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances fell to 4.42%, the lowest rate since mid-June, from 4.49%. Points increased to 0.44 of a point from 0.34 of a point (including the origination fee) for 80% loan-to-value ratio loans.
The average 30-year rate for jumbo loan balances (greater than $417,000) dropped to 4.45%, the lowest rate since mid-June, from 4.53%. Points decreased to 0.21 of a point from 0.22 of a point (including the origination fee) for 80% LTV loans.
The average 30-year rate for FHA loans fell to 4.15%, the lowest rate since mid-June, from 4.21%, with points increasing to 0.37 of a point from 0.35 of a point (including the origination fee) for 80% LTV loans.
The average 15-year fixed-rate decreased to 3.52%, the lowest rate since mid-June, from 3.55%. Points rose to 0.34 of a point from 0.33 of a point (including the origination fee) for 80% LTV loans.
The average contract interest rate for hybrid loans that have fixed rates for five years and then convert to one-year adjustable-rate mortgages dropped to 3.25%, the lowest rate since mid-June, from 3.26%, with points increasing to 0.29 of a point from 0.28 of a point (including the origination fee) for 80% LTV loans.