Rising mortgage rates have spurred a wave of new refinances.
The Mortgage Bankers Association (MBA) reports that refinance application volume increased 12 percent for the week ending January 4, 2013 from the week prior.
According to the MBA, mortgage rates rose 0.09 percentage points during the same one-week period.
The MBA Weekly Application Survey shows that refinance application rose as conforming mortgage rates climbed last week.
From the week prior, the trade group shows a steep rise in rates :
For a mortgage at the standard conforming loan limit of $417,000, this increase yields a $21 monthly mortgage payment increase.
In high-cost areas such as Brooklyn, New York; San Diego, California; and Eagle County, Colorado, where loan sizes can range up to $625,500, the monthly jump may be larger. Over the same time period, accompanying discount points rose by a marginal seven basis points.
In addition, mortgage refinance applications continue to dominate overall mortgage activity.
For the week ending January 4, 2013, refinances applications -- which include applications for the HARP mortgage program and the VA IRRRL -- accounted for 82 percent of mortgage applications filed. This is unchanged from the week prior.
The government's Home Affordable Refinance Program (HARP) continues to boost refinance applications nationwide. HARP is the government's mortgage program for underwater homeowners whose homes have lost value since the date of purchase.
HARP is known by several names including "The Obama Refi", "Making Home Affordable" and, because of its recent relaunch, "HARP 2". As part of the program's revamp, loan-to-value restrictions were removed for most HARP applicants and other guideline changes have made qualifying for program faster and simpler.
HARP refinance applications accounted for 1 in 4 refinance applications for the week ending January 4, 2013. This is a slight increase over year-to-date averages.
Through October 2012, the Federal Home Finance Agency (FHFA) reports, the HARP program was in play for just 1 in 5 refinances.
HARP activity appears to be increasing as a percentage of all closed loans and the Mortgage Bankers Associations expects that trend to continue through 2013. Should the HARP 3 program pass, Home Affordable Refinance Program refinances will likely soar.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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2016 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)