Mortgage Refinance Applications Surge Prior to FHA Raises Insurance Rates
ByHomeowners and first time home buyers were busy last week submitting their home mortgage and refinance loan applications into process in an effort to beat the looming deadline when the higher FHA insurance premiums are mandated. According to the Mortgage Bankers Association, borrowers rushing to beat an FHA mortgage insurance premium hike and a slight increase in mortgage refinancing applications helped increase seasonally adjusted application volumes overall by 5.3% during the week ending April 15, Overall, FHA refinance applications rose 5.9% on an unadjusted basis, bolstered by a seasonally adjusted 10% increase in purchase loan applications. This brought seasonally adjusted home buying to a high not seen since Dec. 3, 2010. Government mortgage applications spiked 17.6% during the week ending April 15. But while the four week moving average for seasonally adjusted home purchase applications was up 2.5% last week, unadjusted, purchases were still down 11.4% from the same week a year ago.
Consumers Raced to Lock in FHA Home Purchase and Refinance Loans Before Insurance Premium Increase Goes into Effect
The four week moving average for loan applications overall was down 2.9% as of the week ending April 15. For the most part, refinance loan volume has drastically decreased in 2011 as the pool for qualified borrowers has shrunk significantly. Higher FHA insurance premiums certainly haven’t helped loan origination for the FHA streamline program.
The MBA home refinance index increased 2.7% during the week ending April 15, possibly due to a decline in rates last Friday when the rate-indicative benchmark 10-year Treasury bond yield fell to levels closer to 3.4% from levels around 3.5%. On average during the week ending April 15, the contract interest rate for 30-year home loans with fixed rates fell to 4.83% from 4.98% the previous week, with points increasing to 1.07 from 0.93 of a point. For 15-year home loans with fixed rates, the average contract interest rate dropped to 4.07% from 4.17% with points falling to 1.02 from 1.22.
While mortgage refinance rate averages were up week-to-week during the week ending April 15, the four week moving average for the refinance index was down 5.7% and the market-share of mortgage refinancing activity dropped to 58.5% from 60.3%, marking the lowest share for refinance loans seen since May 7, 2010. The adjustable-rate home loan share was up slightly during the week ending April 15, at 6.5% compared to 5.9%.
