Mortgage rates set record low, refinances surgeby Tim Manni
The correlation between mortgage-rate movements and the current refinance numbers certainly isn’t rocket science. Record-low mortgage rates are the reason behind one of the longest refi booms in history. And rates just keep on falling.
Mortgage rates held close to or moved into new record-low territory last week, according to the Weekly Mortgage Rates Radar, the latest mortgage rate report from HSH.com.
30-year conforming still falling
“With fixed rate mortgages easing to new record lows again this week, the mortgage market continues to bend to the Fed’s desire,” said Keith Gumbinger, vice president of HSH.com. “The weakness in the economy is serving to press rates downward, and since the Fed began its new policy of mortgage backed security (MBS) purchases on September 14, the average 30-year fixed rate mortgage has declined by almost a quarter of a percentage point.”
The average rate for conforming 30-year fixed-rate mortgages fell by seven basis points (0.07 percent) to 3.48 percent. Conforming 5/1 Hybrid ARM rates increased by a single basis point, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 2.68 percent.
“It’s not clear how much additional decline in rates will come as a result of the Fed’s actions,” notes Gumbinger. “To a great degree, that will depend upon whether or not investors continue to participate in the MBS market at the same level as they did prior to the Fed joining the fray. Should yields on mortgages get too low, investors may start to look elsewhere to find better returns, which would tend to temper any decline.”
Refinance apps setting records of their own
While this period of low rates is certainly a byproduct of a struggling economy, for those who can qualify for financing, it has never been a better time to refinance.
According to the Mortgage Bankers Association, for the week ending September 28, mortgage applications were up 16.6 percent from the week prior. Refinance applications jumped 20 percent from the previous week.
“Refinance application volume jumped to the highest level in more than three years last week as each of the five mortgage rates in MBA’s survey dropped to new record lows in the survey,” said Mike Fratantoni, MBA’s Vice President of Research and Economics, in a news release. “Financial markets continue to adjust to QE3, as the ongoing presence of the Federal Reserve as a significant buyer of mortgage-backed securities applies downward pressure on rates. Although there was a slight decline in the HARP share of refinance activity, the level of HARP volume remains steady.”
The MBA reports that refinances currently make up 83 percent of the application pie, an increase from 81 percent from the week prior.