Industry NewsMortgage

Fed action spurs refi boom

Without jobs, low rates may not boost sales

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The Federal Reserve's initiatives to keep mortgage rates down are spurring a rush to refinance that will test the operational capacity of lenders, but low rates won't translate into higher home sales unless unemployment stabilizes, the Mortgage Bankers Association said today. The MBA has dramatically revised its forecast for 2009 mortgage refinancings, saying it expects lenders will fund $1.96 trillion in refinance loans this year. That's an $824 billion increase from last month's forecast, when the MBA said it expected $1.13 trillion in refinancings in 2009. Last year, by comparison, lenders refinanced only $765 billion in loans. Driving the rush to refinance are mortgage rates not seen since the early 1950s and 1940s, said Jay Brinkmann, MBA's chief economist. Most homeowners with mortgages originated before the second half of 2008 are going to have at least a 50-basis-point incentive to refinance for several months or more, Brinkmann said (100 basis points equals 1 pe...