30 Year Fixed Mortgage Rates Down, Refinancing and Mortgage Applications Hit a Record

Written By: admin on December 24, 2008 No Comment

Wednesday, December 24, 2008, after 30 year fixed mortgage rates drop last week, refinancing mortgage and mortgage applications raise. U.S. mortgage applications surged to the highest level in over five years in the latest week, as potential borrowers came out in droves to refinance as government interventions helped push interest rates down to record lows, data from an industry group showed on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both buy and refinance loans, for the week finished December 19 soared 48.0 percent to 1,245.4, the highest reading since the week finished July 18, 2003, when it reached 1,284.3.

Potential borrowers were lured by mortgage rates that have dropped dramatically since the Federal Reserve unveiled a plot last month to buy up to $500 billion of mortgage securities backed by government-sponsored enterprises Fannie Mae, Freddie Mac and Ginnie Mae. The program also entails buying up to $100 billion of debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks.

Spencer Rascoff, chief operating officer at Zillow.com, a real estate website based in Seattle, said historically low mortgage rates are a boon for the mortgage industry and to many borrowers, but it remains to be seen if they will have a substantial effect on the housing market.

“The excellent news is that these refis could help some homeowners avoid expensive resets on adjustable rate mortgages, and in turn prevent some foreclosures,” he said on Monday.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.04 percent, down 0.14 percentage point from the previous week, the lowest level since the week finished June 13, 2003, when the rate reached 4.99 percent.

Interest rates were also well below year-ago levels of 6.10 percent.

The MBA’s seasonally adjusted buy index rose 10.6 percent to 316.5. The index, but, came in well below its year-ago level of 394.5, a drop of 19.8 percent.

Overall mortgage applications last week were 106.3 percent above their year-ago level. The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was up 28.8 percent.

The group’s seasonally adjusted index of refinancing applications jumped 62.6 percent to 6,758.6, the highest reading since the week finished July 4, 2003, when it reached 6,768.3.

The index was up 252.9 percent from its year-ago level of 1,915.3.

The refinance share of applications increased to 83.2 percent from 76.9 percent the previous week. The adjustable-rate mortgage share of activity decreased to 0.8 percent, down from 1.1 percent the previous week.

Fixed 15-year mortgage rates averaged 4.91 percent, down from 4.93 percent the previous week. Rates on one-year ARMs decreased to 6.36 percent from 6.63 percent.

The U.S. housing market is suffering the worst downturn since the Fantastic Depression as a huge supply of unsold homes, tighter lending standards and record foreclosures push down home prices.

While U.S. housing market indexes tend to be volatile, data from the MBA may help gauge how the hard-hit sector is faring.