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Refinance Index At Lowest Point In 18 Months...
Mortgage Bankers Association of America ^ | December 10, 2003

Posted on 12/10/2003 5:34:09 AM PST by Starwind

Refinance Index At Lowest Point In 18 Months While ARM Share Of Applications Reaches Highest Level In Nearly Four Years

WASHINGTON , D.C. ( December 10, 2003 ) ? The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending December 5. The Market Composite Index of mortgage loan applications?a measure of mortgage loan applications for purchases and refinancings?decreased by 12.2 percent to 601.6 on a seasonally adjusted basis from 685.1 one week earlier. On an unadjusted basis, the Index increased by 22.3 percent compared with last week and was down 33.6 percent compared with the same week one year earlier.

The MBA seasonally adjusted Purchase Index decreased by 9.5 percent to 399.8 from 441.8 the previous week. The seasonally adjusted Refinance Index decreased by 15.5 percent to 1775.5 from 2100.0 one week earlier. Other seasonally adjusted index activity included the Conventional Index, which decreased 11.9 percent to 828.1 from 940.1 the previous week. The Government Index decreased 13.9 percent to 223.6 from 259.6 the previous week.

"The drop in refinancings as a share of total loan originations is bringing to light the desire of many homebuyers to look at adjustable rate and hybrid loan products, those where the rate is fixed for 3 to 7 years, as an alternative to traditional fixed rate financing, particularly as short-term rates remain so low," said Jay Brinkmann, MBA vice president of research and economics.

The refinance share of mortgage activity decreased to 49.4 percent of total applications, from 50.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 29.3 percent from 26.6 percent the previous week.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.76 percent from 5.93 percent one week earlier , with points decreasing to 1.38 from 1.45 the previous week (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.10 percent from 5.24 percent one week earlier , with points decreasing to 1.39 from 1.45 the previous week (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs decreased to 3.57 percent from 3.63 percent one week earlier , with points increasing to 1.14 from 1.07 the previous week (including the origination fee) for 80 percent LTV loans.

**SPECIAL NOTES**

The survey covers approximately 40 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.


TOPICS: Business/Economy
KEYWORDS: mortgageapps; mortgages

1 posted on 12/10/2003 5:34:09 AM PST by Starwind
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To: AntiGuv; arete; sourcery; Soren; Tauzero; imawit; David; AdamSelene235; sarcasm; OwenKellogg; ...
Fyi...
2 posted on 12/10/2003 5:34:37 AM PST by Starwind (The Gospel of Jesus Christ is the only true good news)
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To: Starwind
Its gonna take another couple of years for people to run their credit cards up sufficiently to motivate people to re-fi again.

The problem is home value appreciation is stalling (my area) so there won't be as much equity (if any) to tap into.

Tick...Tick...Tick.....
3 posted on 12/10/2003 5:39:13 AM PST by Rebelbase (Diaparerne is crucial)
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To: Rebelbase
It ain't stalling in my region. I suggest all you people with flat home values come to southern OH. Every year, the prices of homes are going up.
4 posted on 12/10/2003 5:51:05 AM PST by LS
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To: LS
Home prices will continue to increase, as long as our population continues to explode. We are letting in 50,000 more immigrants each and every week, they all gotta live somewhere.

Every week, we need housing, hospitals, schools, etc for another city of 50,000 just because of immigration.

5 posted on 12/10/2003 6:37:59 AM PST by waterstraat
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To: waterstraat
Ummm, but it isn't RENTAL units that are expanding. And recent immigrants don't just leap into $200,000 homes. In fact, I see VERY little low-cost housing being built.
6 posted on 12/10/2003 7:29:49 AM PST by LS
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To: Rebelbase
I see this alleged all the time on these threads. Does anyone have any *real* data on this? Are anything like a majority pulling major equity out in a re-fi?

I re-fi'd about a year ago, and not a penny went towards credit card debt. Credit cards get paid in full every month. I did go from a 30-year note (20 remaining) to a 15-year note, though.
7 posted on 12/10/2003 7:33:35 AM PST by FreedomPoster (this space intentionally blank)
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To: FreedomPoster
Are anything like a majority pulling major equity out in a re-fi?

The data is published weekly & monthly by the Fed. It has been posted often in the "Credit Bubble Bulletin" threads. But here is the same point made by Alan Greenspan:

From the Federal Reserve Board website:

Remarks by Chairman Alan Greenspan
At the annual convention of the Independent Community Bankers of America, Orlando, Florida (via satellite)
March 4, 2003

... Previous Federal Reserve surveys of the disposition of cash-outs indicate that a substantial amount--perhaps half--was used to finance home modernization and personal consumption expenditures, outlays that directly affect GDP and jobs, and that likely was the case again last year.
[...snip...]
It is likely, however, that home sellers, after setting aside a down payment for the family's next home, expended a considerable part of their home equity extraction on goods and services.
[...snip...]
Refinance and home purchase originations, seasonally adjusted, peaked in the fourth quarter of last year. It is difficult to imagine that pace being maintained in the current quarter.
[...snip...]
In summary, the frenetic pace of home equity extraction last year is likely to appreciably simmer down in 2003, possibly notably lessening support to household purchases of goods and services....
[...snip...]
Home equity extraction directly finances household purchases of goods and services by liquefying previously illiquid assets. It also indirectly finances such purchases by facilitating outlays financed by credit card and other nonmortgage consumer debt. Equity extraction has been a major source of repayment of such debt.

Home equity extraction (re-fi's), at record levels, at a pace "difficult to imagine" even "frenetic" at the end of last year, mostly spent on goods and services, and this year (2003) is still setting records.

And...

Remarks by Chairman Alan Greenspan
At the Securities Industry Association annual meeting, Boca Raton, Florida
November 6, 2003

Fortunately, a vibrant housing market lifted construction activity and, by facilitating home equity extraction, provided extra support to consumer spending.
And re-fi's still supporting consumer consumer spending 8 months later.
8 posted on 12/10/2003 7:58:40 AM PST by Starwind (The Gospel of Jesus Christ is the only true good news)
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To: LS
Why do you think that 50,000 immigrants each week will only move into rental units, or into low cost housing? Some of them make good money, and others of them share a house with another family. Its not hard to make house payments on a $200,000 house if the house payment is split 4 ways.
9 posted on 12/10/2003 8:40:17 AM PST by waterstraat
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To: waterstraat
Its not hard to make house payments on a $200,000 house if the house payment is split 4 ways.

And when the down payment is a subsidized grant for 1st time sub-prime borrowers.

10 posted on 12/10/2003 9:03:52 AM PST by Starwind (The Gospel of Jesus Christ is the only true good news)
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