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Mortgage rates hitting a historic low

January 23, 2012
By JOHN PEPIN - Journal Staff Writer (jpepin@miningjournal.net) , The Mining Journal

MARQUETTE - The Mortgage Bankers Association said mortgage applications nationally jumped 23 percent upward in a week, boosted by historically low rates, with refinancing representing the bulk of the activity.

The association said the Market Composite Index - a measure of mortgage loan application volume - increased 23.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 38.1 percent compared with the previous week.

The movement was noted in the association's Weekly Mortgage Applications Survey for the week ending Jan. 13. The weekly survey covers more than 75 percent of all U.S. retail residential mortgage applications, and has been conducted since 1990. Those responding to the survey include mortgage bankers, commercial banks and thrifts.

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The same trend showcased in the national figures was reflected locally.

"It had slowed down there for a while but over the last week our pipeline is flowing again," said Debbie Danielkiewicz, a loan officer with the U.P. Catholic Credit Union in Marquette. "People are still looking at refinances and the rates are historically low."

According to the association, the Refinance Index increased 26.4 percent from the previous week to its highest level since August 8, 2011. The seasonally adjusted Purchase Index increased 10.3 percent from one week earlier to its highest level since December 12, 2011. The unadjusted Purchase Index increased 28.4 percent compared with the previous week and was 2.2 percent higher than the same week one year ago.

Danielkiewicz said most of the loan applications currently submitted at her financial institution have been for refinances, again reflecting that national trend.

The association said the refinance share of mortgage activity increased to 82.2 percent of total applications from 80.8 percent the previous week. This is the highest refinance share since October 22, 2010. The adjustable-rate mortgage share of activity increased to 5.6 percent from 5.4 percent of total applications from the previous week.

"Interest rates dropped last week due to continuing anxieties regarding the fragile economic situation in Europe," said Michael Fratantoni, the association's vice president of research and economics, in a news release. "With mortgage rates reaching new lows, refinance volume jumped and MBA's refinance index reached its highest level in the last six months. Purchase activity also increased as buyers returned to the market after the holiday season."

Danielkiewicz said interest rates for auto loans are still low too -between 3 and 4 percent- which has kept buyer interest up in new and used vehicles.

The association provided details of the low mortgage interest rates found in its survey:

- The average contract interest rate for 30-year fixed-rate motgages with conforming loan balances ($417,500 or less) decreased to 4.06 percent from 4.11 percent, with points increasing to 0.48 from 0.41 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the lowest 30-year fixed rate in the history of the association's weekly survey. The effective rate also decreased from the previous week.

- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 4.40 percent from 4.34 percent, with points decreasing to 0.37 from 0.47 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also increased from the previous week.

- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.91 percent from 3.96 percent, with points decreasing to 0.59 from 0.72 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the lowest 30-year FHA rate in the history of the survey. The effective rate also decreased from the previous week.

- The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.33 percent from 3.40 percent, with points increasing to 0.39 from 0.37 (including the origination fee) for 80 percent LTV loans. This is the lowest 15-year fixed rate in the history of the survey. The effective rate also decreased from the previous week.

- The average contract interest rate for 5/1 ARMs remained unchanged 2.90 percent, with points decreasing to 0.45 from 0.49 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the lowest 5/1 ARM rate since MBA started tracking the series in January 2011. The effective rate also decreased from the previous week.

Many analysts have said the drop in mortgage interest rates had helped homeowners avoid foreclosures.

For more information, visit: www.mortgagebankers.org

John Pepin can be reached at 906-228-2500, ext. 206.

 
 

 

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