New purchase applications up despite rate increase, trouble in refinances

The Mortgage Bankers Association reported a drop in refinance applications last week after Fixed Rate Mortgage (FRM) rates rose more than three-tenths of a percent and Freddie Mac’s Primary Mortgage Market Survey also showed an increase in rates, though only about half as large. The reports on Adjustable Rate Mortgage (ARM) rates were mixed. Despite the increase in rates, the Mortgage Bankers Association reported a 2.5% increase in purchase mortgage applications.

There’s bad news on the credit availability front for homeowners looking to refinance out of bad situations. Eric from Dream Home Financing reported that:

Although refinance applications have increased, many borrowers no longer qualify or the rate adjustments due to their new credit situation have resulted in little benefit to refinance.

Ditech Home Loans puts more specific numbers to the situation for refinances:

Fall out for refinance applications are estimated at 50% to 65%, because of low appraisals and qualifying issues. The new Fannie Mae and Freddie Mac appraisal code may contribute to more fall out, as well as FHA’s 2 appraisal requirement for cash out refinancing over 85%.

Freddie Mac Conforming Rates At a Glance

  • 30-year FRM: 5.12%, 0.7 point
  • 15-year FRM: 4.8%, 0.7 point
  • 5-year hybrid ARM: 5.24%, 0.6 point
  • 1-year ARM: 4.92%, 0.7 point

Average Mortgage Rates

30-year FRM: 5.24%, 1.16 points*
15-year FRM: 4.99%, 1.20 points
1-year ARM: 5.89%, 0.07 points

* Points reported by Mortgage Bankers Association in this survey include origination fees as well as traditional discount points. Average rates are based on an 80% LTV loan. This means a loan amount no more than 80% of the property value as determined by the lower of the purchase price or appraised value. Typically this means a 20% down payment, though an 80% loan can also be achieved with a second mortgage carried by the seller or a third party lender for the difference between the actual down payment and 20%.

[tags]housing market,mortgages,mortgage market,mortgage rates,subprime[/tags]

LONG-TERM MORTGAGE RATES RISE THIS WEEK, REVERSING 11-WEEK TREND

“Fixed-rate mortgages followed bond yields and edged up this holiday week,” said Frank Nothaft, Freddie Mac vice president and chief economist. “However, over the first three weeks of 2009, 30-year fixed-rate mortgages averaged 0.25 percentage points below its monthly average for December 2008. As a result, the number of mortgage applications for refinancing was roughly about 86 percent of all conventional loans over the same time period.
“New housing construction continues to thin due to foreclosures and an abundance of unsold homes. Housing starts for 1-family homes fell 13.5 percent in December 2008 to an annualized pace just under 400,000 houses, the slowest pace since the data were collected in January 1959. In addition, homebuilder confidence fell to a record low in January since history began in January 1985.”

Mortgage Applications Decrease in Latest MBA Weekly Survey

The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending January 16, 2009.  The Market Composite Index, a measure of mortgage loan application volume, was 1195.3, a decrease of 9.8 percent on a seasonally adjusted basis from 1324.8 one week earlier.  On an unadjusted basis, the Index decreased 10.3 percent compared with the previous week and increased 23.1 percent compared with the same week one year earlier.
The Refinance Index decreased 12.4 percent to 6491.8 from 7414.1 the previous week and the seasonally adjusted Purchase Index increased 2.5 percent to 303.1 from 295.8 one week earlier.  The Conventional Purchase Index increased 2.8 percent while the Government Purchase Index (largely FHA) increased 1.8 percent.
 
The four week moving average for the seasonally adjusted Market Index is down 1.0 percent.  The four week moving average is down 1.0 percent for the seasonally adjusted Purchase Index, while this average is down 1.0 percent for the Refinance Index.
The refinance share of mortgage activity decreased to 83.3 percent of total applications from 85.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 1.5 percent from 1.1 percent of total applications from the previous week.

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