Refi applications soar as rates hit new lows

Applications for refinance loans jumped 25.6 percent for the week ending Jan. 9 as borrowers sought to take advantage of a continued free-fall in fixed-rate mortgage rates for borrowers with good credit.

Applications for purchase loans fell 14.1 percent, and refinance applications accounted for 85.3 percent of all mortgage applications, the Mortgage Bankers Association said in releasing a weekly survey of lenders.

Applications for adjustable-rate mortgages accounted for 1.1 percent of activity, up from 0.9 percent the previous week, with ARM loans offering little or no savings over fixed-rate loans.

Freddie Mac, in its weekly survey of mortgage rates, said interest rates last week on 30-year fixed-rate conforming loans fell for the tenth week in a row, to a new low.

For the week ending Jan. 8, 30-year fixed-rate mortgages averaged 5.01 percent with an average 0.6 point, down from 5.1 percent a week ago and 5.87 percent a year ago. Freddie Mac has never seen lower rates since the survey began in 1971.

Since the end of October, rates on 30-year fixed-rate mortgages have declined by almost 1.5 percent, which translates into a savings of about $184 a month on a $200,000 loan, said Freddie Mac vice president and chief economist Frank Nothaft.

Nothaft noted that the Federal Reserve announced on Nov. 25 that it planned to purchase up to $500 billion of mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae (see story). By way of comparison, Nothaft noted that there were $4.7 trillion in such securities available at the end of September.

The 15-year FRM last week averaged 4.62 percent with an average 0.7 point, down from 4.83 percent the week before and 5.43 percent a year ago. The 15-year FRM has not been lower since June 13, 2003, when it averaged 4.60 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.49 percent last week, with an average 0.7 point, down from 5.57 percent the previous week and 5.63 percent a year ago.

One-year Treasury-indexed ARMs averaged 4.95 percent this week with an average 0.5 point, up from 4.85 percent the previous week and 5.37 percent a year ago.

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