US home refinancing demand at highest in 15 months

By Julie Haviv

NEW YORK, Aug 18 (BestGrowthStock) – U.S. mortgage applications
leaped last week as rock-bottom rates lifted demand for home
refinancing loans to its highest level in 15 months, the
Mortgage Bankers Association said on Wednesday.

Home loan refinancing puts extra cash into consumers’ hands
that can be used to pay off existing debt or funnel into the
economy through purchases. By lowering a monthly mortgage
payment it may also help some homeowners avoid default and
foreclosure.

The MBA said its seasonally adjusted index of mortgage
applications (USMGM=ECI: ), which includes both purchase and
refinance loans, for the week ended Aug. 13, increased 13.0
percent. The four-week moving average of mortgage applications,
which smooths the volatile weekly figures, was up 2.6 percent.

The MBA’s seasonally adjusted index of refinancing
applications (USMGR=ECI: ) increased 17.1 percent, the highest
since the week ended May 15, 2009.

Borrowing costs on 30-year fixed-rate mortgages, excluding
fees, averaged 4.60 percent, up 0.03 percentage point from the
previous week’s record low. The survey has been conducted
weekly since 1990.

Interest rates were also below their year-ago level of 5.15
percent.

Thomas Meyer, CEO of J.I. Kislak Mortgage in Miami Lakes,
Florida, said people in Florida, and other hard-hit housing
markets, are finding it difficult to refinance because of
appraisals coming in significantly below their current mortgage
amount.

“High unemployment has certainly had a dampening effect,
but that runs up against the psychological orientation that now
is the time to get a deal, with housing prices low and interest
rates low,” he said.

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For a graphic on mortgage applications, click on:
http://link.reuters.com/vaz55n

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Meyer said he is seeing a pick up in activity, mostly in
the home loan purchase business as opposed to the refinance
business.

“There is a feeling that we are at, or very close to, the
bottom in the fall of housing prices and that now is the time
to buy,” he said.

The housing market has been struggling since the April 30
expiration of popular home buyer tax credits. The Commerce
Department on Tuesday said U.S. housing starts rose but to a
much weaker rate than expected in July, while permits for
future home construction fell to their lowest level in more
than a year.

Low rates failed to foster demand for loans to purchase a
home last week, with demand sliding for the first time in five
weeks, MBA data showed.

The MBA’s seasonally adjusted purchase index (USMGPI=ECI: ),
a tentative early indicator of home sales, decreased 3.4
percent. Demand is down about 42 percent since the tax credit
expiration.

To take advantage of the tax credits, buyers had to sign
purchase contracts by April 30. Contracts originally had to
close by June 30, but that was extended by three months.

The MBA said fixed 15-year mortgage rates averaged 3.99
percent, up from the previous week’s record low of 3.95
percent. Rates on one-year adjustable-rate mortgage, or ARMs,
decreased to 6.90 percent from 7.00 percent.

(Editing by Diane Craft; Reuters Messaging:
[email protected]; email:
[email protected]; Tel: +1 646 223 6153))

US home refinancing demand at highest in 15 months