Thursday, August 19, 2010

Refinancing Activity Hits 15-Month High As Mortgage Rates Fall to Historically Low Levels


Wall Street Journal -- "The much-anticipated rise in applications to refinance existing mortgages finally came through over the past week.  The Mortgage Bankers Association said Wednesday its refinancing index jumped 17% to 4676.70 in the week to Wednesday, soaring to the highest since May 2009. The rise contrasts with the four-week average of a 3.2% increase.

The sudden jump is a sign that mortgage rates—which clocked up record lows this week—have fallen far enough to encourage a new wave of refinancings from homeowners, many of whom obtained relatively low rates last year. The average rate for a 30-year home loan dropped to 4.4% last week, according to the latest Freddie Mac survey (see chart above).

A refinancing wave also could be a boon for the flailing U.S. economy. Economists at Morgan Stanley estimate that if 50% of mortgages in mortgage-backed bonds are refinanced, it would free up $46 billion a year for consumers. To put that in perspective, that is more money than the latest extension of unemployment benefits."

5 Comments:

At 8/19/2010 2:24 PM, Blogger morganovich said...

and new applications fall again.

 
At 8/19/2010 6:41 PM, Blogger marmico said...

Ya, jonesing for the wonderful monthly SoCal real estate news, yet. Sales down 21% month over month and year over year.

Next week, NAR reports July existing home sales. 4.2 million SAAR, 11.2 months' supply. Are you taking the over or under?

 
At 8/20/2010 10:19 AM, Blogger bobble said...

" . . that is more money than the latest extension of unemployment benefits."

unfortunately, the unemployed can't qualify for a refinance :o[

 
At 8/20/2010 2:31 PM, Blogger Junkyard_hawg1985 said...

What amazes me is that with interest rates at 4.4%, new housing starts today are lower than they were in 1982 (severe recession year) when interest rates were at 18%.

http://calculatedriskimages.blogspot.com/2010/08/housing-starts-long-july-2010.html

 
At 8/22/2010 8:54 AM, Blogger juandos said...

"The sudden jump is a sign that mortgage rates—which clocked up record lows this week—have fallen far enough to encourage a new wave of refinancings from homeowners, many of whom obtained relatively low rates last year"...

Hmmm, over at Vox Popoli there seem to be some sound reasons for a collapse in home sales and with it some panic...

 

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