The Mortgage Bankers Association released a report Wednesday that showed home loan applications jumped last week to the highest levels in a couple months as homeowners actively pursued refinancing as rates sit near historically lows.
The association’s Weekly Mortgage Applications Survey for the week ending December 4, 2009 showed an 8.5 percent increase in loan application volume on a seasonally adjusted basis, compared to the week prior.
Refinancing activity pushed weekly growth, with the refinancing index adding 11.1 percent for the week compared to the week before. Refinancing also accounted for 74.4 percent of all mortgage activity for the week, up from 72.1 percent a week earlier.
The average interest rate for a 30-year fixed-rate mortgage increased to 4.88 percent from 4.79 percent a week prior. Points increased to 1.17 from 1.00 for 80 percent loan-to-value ratio loans. The increase snaps a six week string of declining rates. However, the increase might have been a catalyst for increased refinancing activity as homeowners may believe rates have finally bottomed out.
The average interest rate for 15-year fixed mortgages increased to 4.33 percent from 4.27 percent, with points decreasing to 1.02 from 1.33 for 80 percent LTV loans, according to the Mortgage Bankers Association.
With rates expected to sit near historic lows in coming months and the extension of tax breaks, mortgage applications and home purchases are expected to be more active this winter, generally a slow time for the industry.
The Obama administration extended the $8,000 new home buyer credit to April 30. The tax break was set to expire back on November 30. The administration also added a $6,500 credit for existing homeowners to make move-up purchases.
