Home loan applications for mortgage refinancing increased for the first time since late August, as borrowers sought to take advantage of the lowest market interest rates in more than 50 years.
[IMAGE]The ""Mortgage Bankers Association"":http://www.mortgagebankers.org (MBA) reported Wednesday that its measurement of refinance applications jumped 21 percent for the week ending October 8, 2010. The refinance share of mortgage activity increased to 83.1 percent of total applications. That's the biggest piece of the pie claimed by refinancing since January 2009.
""After five weeks of steadily declining rates to yet another new low, borrowers who had been on the fence jumped off, which factored into refinance activity surging more than
[COLUMN_BREAK]20 percent,"" said Michael Fratantoni, MBA's VP of research and economics. ""Refinance application volumes are now close to the highest level this year.""
The sudden swell in refinances helped to counter an 8.5 percent decline in home purchase applications, pushing MBA's overall index of mortgage loan application volume up 14.6 percent for the week.
Fratantoni described purchase activity as ""generally weak,"" but noted that applications for conventional purchase mortgages are now at their highest level since the beginning of May following the expiration of the homebuyer tax credit.
""Last week saw a big jump in applications for FHA [Federal Housing Administration] loans to purchase homes,"" Fratantoni went on to explain. ""We surmised that this was due to potential buyers wanting to beat the stricter FHA standards that went into effect October 4th. This conjecture was confirmed by the fact that this week FHA applications fell back to a level closer to the average seen over the past four months.""
According to MBA's survey, the average contract interest rate for 30-year fixed-rate mortgages decreased to 4.21 percent last week, down from 4.25 percent. Rates for 15-year fixed-rate mortgages hit 3.62 percent, compared to 3.73 percent the week before. Both are the lowest ever recorded in the trade group's study.