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Refinancing surge pushes mortgage applications higher

By Gretchen Wegrich Updated on 6/3/2013

By Gretchen Wegrich

A surge of mortgage refinance applications pushed the total number of mortgage applications upwards by 4% during the week that ended April 5 after dropping the previous week, reported the Mortgage Bankers Association.

The refinance index also reversed the downward trend of the previous week, rising by 6%.

At the same time, the purchase index shrank by 1% compared to a slight upswing during the week prior.

"Although total purchase application volume fell last week, there was a significant divergence between the conventional and government markets," said Mike Fratantoni, vice president of research and economics at MBA.

Fratantoni added,"Following the April 1 increase in Federal Housing Administration mortgage insurance premiums, government purchase applications fell by almost 14%, to their lowest level since February 2013."

“On the other hand, applications for conventional purchase loans increased by more than 5 percent, bringing the conventional purchase index to its highest level since October 2009 and the highest level since the expiration of the homebuyer tax credit.  With these changes, the government share of all purchase loans fell to 30 percent, the lowest level since we began tracking this series in 2011.”

MBA data also revealed that the percentage of mortgage activity generated by refinances had reached 75%, while adjustable-rate mortgage activity made up 5% of total applications.

The average 30-year, fixed-rate mortgage with a conforming loan balance fell from 3.68% to 3.76%.

Concurrently, the average 30-year FRM with a jumbo loan balance decreased to 3.79%, a decrease of 0.06% compared to the previous week.

The average contract interest rate for the 30-year FRM backed by the FHA shrank to 3.43%.

Finally, the 5/1 ARM changed direction from a week prior and decreased to 2.58% from 2.60%, and the 15-year FRM shrank to 2.92% from 2.99%, the lowest it has been since Jan. 2013.

About The Author:
Gretchen Wegrich
Gretchen Wegrich is an editor at Lender411. She specializes in mortgage basics, personal finance and green living. She graduated with a bachelor's degree in writing from University of California, San Diego and previously worked at the Santa Cruz Sentinel. Contact her at gretchen@lender411com.

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