Refinancing prospects for certain borrowers have improved somewhat, according to the Mortgage Bankers Association.
The refi app level in the MBA's most recent survey, reflecting the week ended July 2, jumped 9.2% week-to-week and is now the highest seen since the week ended May 15, 2009.
The industry is still originating loans in a challenging market given tight underwriting and other conditions reflecting the recent downturn, but Michael Fratantoni, MBA's vice president of research and economics, told MortgageWire there are some developments that have somewhat improved prospects for refi apps in concert with a significant drop in rates.
For example, borrowers who might have refinanced once in the past 18 months and have 30-year rates in the 5%-5.25% range, might do so again, given the drop in rates, including the 15-year's decline to a record low.
Given the narrowing in the jumbo/conforming spread, some jumbo borrowers might also seek to refi, as might adjustable-rate mortgage borrowers who might prefer to move to fixed-rate mortgages even though their rates are adjusting downward. While equity/appraisal challenges remain in many parts of the market, there has been a relative improvement in California prices that he sees as making it possible that some borrowers there that bought at distressed prices might have enough equity to look to refinance.
Still, Fratantoni warns, "We're nowhere close to boom level." In addition, purchase apps continues to trend downward, having seen a week-to-week drop of 2% on a seasonally adjusted basis and 2.3% on an unadjusted basis during the week ending July 2.
On the other hand, with the jump in refis the MBA's Market Composite Index did net a week-to-week gain of 6.7% on a seasonally adjusted basis and 6.5% on an unadjusted basis.
