Mortgage rates inch higher, apps fallby Tim Manni
Rates on the most popular types of mortgages held rather steady according to HSH.com’s Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages was unchanged at 3.69 percent. Conforming 5/1 Hybrid ARM rates increased by two basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 2.79 percent.
“Mortgage rates remain pretty flat as the summer doldrums have set in,” said Keith Gumbinger, vice president of HSH.com. “There’s not been much news to push them strongly in one direction or the other over the last couple of weeks; they are wandering aimlessly at the moment.”
Unclear trends are often evident this time of year, Gumbinger notes. “It’s vacation season and that means that only truly significant news would move the market. In previous years, patterns of stagnant rates have held until early September when new trends may be set to take us into the fall. This may be one of those years.”
Mortgage apps decline
Perhaps swayed by rising rates, mortgage applications were down last week, according to the Mortgage Bankers Association.
While both purchase and refinance applications were down, refinance apps still represented 81 percent of total applications. On the opposite side of the spectrum, ARM applications only represent 4 percent of the total pie, reported the MBA.
HARP applications…should they be higher?
With refinance applications representing over 80 percent of the total share, it would be logical to assume that HARP 2.0 is accounting for a majority of that 81 percent. But that’s not exactly the case, according to the Federal Reserve.
The most recent Senior Loan Officer Opinion Survey reported that one-third of respondents participating in the federal refinance program said that HARP 2.0 “accounted for a significant share of total refinance applications over the past three months…”
You might be thinking to yourself, “that doesn’t seem like a lot.”
The reason more HARP refinances aren’t occurring is due to what’s known as “lender overlays.” These are additional restrictions—above what HARP 2.0 requires–lenders apply to applicants. Sure, HARP is a voluntary program, but even when lenders do participate, they can adjust the qualification standards however they see fit.
But lender overlays aren’t the only thing keeping borrowers from HARP 2.0. Loan officer Dan Green shared these three bullet points on his blog:
- 35 percent of banks add investor overlays, adding new HARP qualification hurdles
- 55 percent of banks turn down HARP loans because they’re “too busy” to work them
- 70 percent of banks don’t want to refinance HARP loans that they don’t currently service
The takeaway here is not that a HARP refinance is near impossible to get. Participating HARP lenders have different qualification restrictions. While one lender may be willing to refinance your loan no matter how underwater you are, another may choose not to refinance a loan that’s more than 5 percent underwater.
Remember, don’t let one denial stop you.
“Mortgage rates are low, but they rarely stay this way,” said Green. “The refi boom will end someday. Make sure you were a part of it.”