MBA Sees a 203% Increase in Refi Apps After Fed Move

Seasonally adjusted refinance applications tracked by the Mortgage Bankers Association skyrocketed in the week ending Nov. 28 by 203% as a result of falling mortgage rates sparked by the Federal Reserve's plan to buy housing government-sponsored enterprises' mortgage-backed securities and debt. "When rates plummeted following the Fed's announcement that it would buy GSE debt and MBS, many of those on the sidelines decided to quickly jump in and take advantage of lower rates before they started to rebound," said Orawin Velz, associate vice president of economic forecasting at the MBA. Seasonally adjusted purchases also rose during the week by 28% and the seasonally adjusted Market Composite Index that combines both refis and purchases jumped 112%. On an unadjusted basis, the composite index was up 51.4% compared to the previous week and down 21.9% from a year ago. Refis dominated the market, representing 69% of apps compared to 49.3% the previous week. The seasonally adjusted four-week moving averages for the composite, purchase and refi indices were respectively up 29.7%, 9.5% and 56.1%. In the latest week, conventional purchases jumped 37.4% while government purchases increased by 39.2%. Adjustable-rate mortgage activity decreased to 1.4% of applications from 3.0% the week previous. Average contract interest rates for 30-year fixed rate mortgages, 15-year FRMs and one-year adjustable-rate mortgages with 80% loan-to-value ratios respectively slid to 5.47% from 5.99%, to 5.13% from 5.78% and to 6.61 from 6.87%. Average points, including the origination fee, fell to 1.16 from 1.23 for 30-year FRMs; to 1.28 from 1.29 for 15-year FRMs and to 0.52 from 0.64 for one-year ARMs.