Mortgage Refinance Loan Applications Decline

Refinance applications in the United States declined last week for the 6^th consecutive week.  Many economists attribute it to rising mortgage refinance rates and tighter lending requirements for refinancing.  According to the Mortgage Bankers Association, refinance loan applications fell by 10% for the week ended March 25. 

Clearly declining home values are hindering many borrowers for qualifying because they do not have sufficient home equity according to 2011 refinance guidelines. Foreclosures are also bringing the home values down and making the lenders more tentative in respect to loosening lending restrictions. Underwater mortgage refinancing is challenging as most borrowers do not meet the Home Affordable Refinance Program that was designed to help borrowers who have negative equity to get another chance at refinancing.  HUD’s decision to raise the insurance rates for FHA mortgage loan programs is only adding fuel to the fire as many borrowers are finding out that lower rates don’t always equate to lower monthly payments.

Will Refinance Rates Continue to Rise?

Rising mortgage refinance rates continue to be a concern for borrowers who were unable to refinance last year when rates fell to record lows. Last week, the average 30-year fixed rate loan rose to 4.92 % from 4.80 %. Closing costs on refinance mortgages have also increased and privately this worries many loan companies fighting for market-share.  The average 15-year fixed rate loan rose to 4.16 % from 4.02 %.  MBA also revealed that the percentage of applicants seeking fixed mortgage refinancing dropped to 64.3 from 66.4 %.