Refinance loan application volume increased another 6.5 percent last week, boosting its share of total activity to a whopping 76.9 percent from 74.3 percent a week earlier, the MBA said today.
The refinance share of total activity was as low as a third of application volume just a few months ago when interest rates were about two percentage points higher.
While home loan applications increased a marginal 2.9 percent on a seasonally adjusted basis for the week ending December 12, it was all about the refis, as purchase activity slumped and FHA lending remained virtually unchanged.
For a change, application volume was beating the pants off year-ago levels, up a sizable 37.3 percent compared to the same week in 2007.
The jump in activity can easily be attributed to the low interest rates floating around these days, as the benchmark 30-year fixed slipped to 5.18 percent from 5.44 percent.
Meanwhile, the 15-year fixed fell to 4.93 percent, down from 5.08 a week earlier.
The one-year adjustable-rate product also dipped 13 basis points to 6.63 percent, but still greatly out-prices more favorable fixed products, explaining the 1.1 percent ARM-share of total applications.
While any increase in mortgage applications is generally perceived as a positive, it should be noted that many of applications will be declined for reasons such as too little equity or insufficient income.
Additionally, the decrease in purchase activity doesn’t say great things for the flagging housing market, the original motivation behind the low interest rate push.
But perhaps potential homebuyers are simply waiting, now that there’s word interest rates will fall even lower.
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