Refinances made up 64 percent of total applications, which is the highest we have seen in a month.
Chicago, IL (PRWEB) January 23, 2014
According to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending January 17 2014, mortgage applications have risen by 4.7 percent. This is in comparison to the previous week. The Market Composite Index, which measures the amount of mortgage loan applications, showed a 4.7 percent increase when seasonally adjusted or a 7 percent increase unadjusted. Last week CF Funding also shared the Market Composite Index results, which showed an 11.9 percent increase as of January 15th.
The overall increase in mortgage applications is not surprising, considering the low 10-year Treasury rates in 2014. Interest rates for 30-year fixed, 15-year fixed, and Adjustable-rate mortgages all decreased last week, some reaching their lowest levels since November 2013.
The Refinance Index also showed improvements for the week ending January 17th, with a 10 percent increase. Refinances made up 64 percent of total applications, which is the highest we have seen in a month. In the previous week, refinances made up 62 percent of applications. Since 2012, we have seen the amount of refinances decrease drastically, so it is good to see the numbers rising.
Yahoo! Finance predicts that refinances will continue to increase. “Going forward, home price appreciation will drive refinance activity as previously underwater homeowners eventually get back to positive equity and take advantage of lower rates.” CF Funding hopes to see this in 2014 as home prices are expected to rise. They also predicted that a change in policy for HARP (Home Affordable Refinance Program) 3.0 may cause an increase in the amount of refinances. If the program is extended to non-government mortgages, it would allow many more Americans to refinance their homes.
HARP was first introduced in February 2009, during the financial crisis. The program helped homeowners in need of a refinance, who were unable to find a low rate on required private mortgage insurance (PMI). Although interest rates were very low at the time, any loan with a loan-to-value ratio of over 80 percent required PMI, which was costly. HARP allowed homeowners who had made a 10 percent down payment to refinance without an increase to their PMI, and homeowners who made a 20 percent down payment could refinance with no PMI costs.
Since then, the program has assisted millions of people, although the amount of HARP loans is decreasing as home values are increasing.