Home Refinance Volume Hits Highest Level In Over A Year
The number of refinance applications posted an increase, based on a latest report, despite the dip in mortgage interest rates.
Refinance volume rose to its highest level in over a year. as more borrowers rushed to take advantage of low interest rates, as stated in a report by CNBC. The report cited latest data from the Mortgage Bankers Association (MBA). In total, the volume of mortgage applications increased by 8.2 percent on a seasonally adjusted basis as compared to previous week's levels. The rise in total mortgage volume was attributed to the huge number of refinance applications, which increased 16 percent for the week ending February 12.
MBA's Chief Economist Michael Fratantoni explained that the uptick in refinance activity was due to borrowers with larger loans who "tend to be more sensitive to a drop in rates." He stated that these borrowers "stand to benefit more from refinancing." He also made mention of the drop in Treasury rates last week, as well as mortgage rates falling to its "lowest level in over a year, with rates on jumbo loans dropping to their lowest level since December 2012."
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $417,000 or less, dipped to 3.83 percent from last week's 3.91 percent. The average contract interest rate for 30-year fixed-rate mortgages for jumbo loans (more than $417,000) also dropped slightly to 3.74 percent from 3.76 percent.
The same report also highlighted that jumbo loans previously carried higher interest rates since they were also considered high-risk mortgage transactions. However, jumbo loans are now at a cheaper level given higher Fannie Mae and Freddie Mac fees on confirming loans. The competition between banks for top borrowers also contributed to lower jumbo loan rates.
Meanwhile, the Federal Housing Finance Agency (FHFA) has launched a 10-day social media campaign on February 17, with the hashtag "#HARPNow," according to a report from the agency's official website. HARP is an acronym for the agency's Home Affordable Refinance Program, which is set to expire on December 31, 2016. The social media campaign is intended to inform struggling homeowners across the top 10 U.S. states that they can refinance their residential properties through the agency's program.
The FHFA and the U.S. Department of the Treasury created HARP during the financial crisis to help homeowners "with little to no equity refinance into a more stable and affordable mortgage," as stated on the report. The FHFA estimated that more 367,600 homeowners may be eligible for the agency's refinance program. The ten states on FHFA's target area list includes Florida, Illinois, Michigan, Ohio, Georgia and California. Pennsylvania and New Jersey were also included in the list, as well as New York and Maryland.