Residential mortgage refinances hit their highest level since 2009 as mortgage interest rates drifted to their lowest levels in history. The data was provided from the weekly survey by Mortgage Bankers Association (MBA) that covers over 75 percent of all U.S. retail residential mortgages.
Mortgage applications increased 16.6 percent for the week ending September 28th from the week before while the Refinance Index increased 20 percent from the previous week. The seasonally adjusted Purchase Index increased 4 percent from one week earlier and the unadjusted Purchase Index also increased 4 percent compared with the previous week and was 11 percent higher than the same week one year ago. So, what does all that mean? Those homeowners who can are heading for the gold rush of monthly savings on their mortgage. These residential property owners are either shortening their remaining term of the mortgage, reducing the interest on their current mortgage or both. The net effect is an increase in income after expenses in the home owner’s pocket, aka more discrentionary income.
Rates have declined since the Federal Reserve's September announcement that it would buy $40 billion of mortgage-backed securities a month, a move that is supposed to help support the housing market and stimulate the economy.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances which are loans of $417,500 or less decreased to 3.53 percent from 3.63 percent, for 80 percent loan-to-value ratio (LTV) loans. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances which are those greater than $417,500, decreased to 3.82 percent from 3.87 percent, for 80 percent LTV loans. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.37 percent from 3.44 percent.
Michael Hobbs, SRA, LEED GA, PahRoo Appraisal & Consultancy
Twitter @Pahroo
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