Drop in rates boosts weekly mortgage applications 3 percent

[Abdul Rahman]

Drop in rates boosts weekly mortgage applications 3 percent

• A drop in interest rates drives homeowners and homebuyers to the mortgage market.
• Total mortgage application volume increased 3 percent last week, according to the Mortgage Bankers Association.
• The mortgage market activity was buoyed by applications to refinance home loans, which increased 5 percent from last week.

Emily Gaffney

6 Hours AgoCNBC.com Getty Images

A drop in interest rates drove homeowners and homebuyers to the mortgage market last week.

Total mortgage application volume increased 3 percent on a seasonally adjusted basis from the previous week, but is down 25 percent from a year ago, according to the Mortgage Bankers Association.

The increased mortgage activity was buoyed by applications to refinance home loans, which increased 5 percent from last week but were down 44 percent from a year ago.

"Mortgage rates decreased last week, which led to the highest volume of refinance applications since mid-June," said MBA chief economist Mike Fratantoni. "The slight drop in rates likely reflected concerns about weakness in certain data released earlier in the week, such as the drop in auto sales, but the market also reacted to stronger-than-expected job growth in Friday's employment report."

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) dropped to 4.14 percent from 4.17 percent, with points increasing to 0.38 from 0.36 (including the origination fee) for 80 percent loan-to-value ratio loans.

Fratantoni said a 15 percent increase in government refinance applications helped boost refinance applications. VA refinances jumped 17 percent last week.

Mortgage applications to purchase a home also increased, by 1 percent from the previous week.

"With rates trading in a narrow range, the purchase market continues to show strength, with application volume running about 7 percent ahead of last year," said Fratantoni.

Refinance applications increased to 46.7 percent of total applications from 45.5 percent in the previous week. The adjustable-rate mortgage share of total mortgage activity increased to 6.8 percent. The FHA share of total applications decreased to 10.2 percent from 10.3 percent the previous week. The VA share of total applications increased to 10.7 percent from 10.1 percent the previous week.

[Cody L.]

Originally posted by @Chris Mason:

Originally posted by @Cody L.:

Oddly enough I got two messages this week from lenders telling me they can do stated loan products. I've heard that before though.

But if they're right, maybe I'll actually refi my San diego house which is at 5.875% from its original loan 14 years ago.

My own personal primary residence which is maybe 50% LTV is more than a full point HIGHER than the highest commercial loan I have (4.75%)

Shrug. At least it's full am I guess.

(If I was a lender my main concern would be equity in the property and strength of borrower - which can be measured in more ways then the all mighty tax return)

The alternative documentation and cashflow based stuff that I've seen, which has no government subsidies involved at all, isn't as good as what you have in place (eg, if you swap out the 5.875% for an ARM that probably wouldn't make sense even if you dropped 1% from the rate). If you find something that makes sense, or is better, please let me be the first person you share it with so I can get them on our approved wholesale lender list ASAP. :P

The Fannie cap of 10 does not apply to a primary residence, and 5+ unit real estate doesn't count towards that cap either, though I'm sure you already know that.

Bank statements and property cashflow are actually what most of the aforementioned stuff uses.

@Ryan Phillips and Cody L, equity cannot generally be used as income because that was deemed unlawful when our elected representatives & their appointees released the "Ability To Repay" rule for owner occupied real estate.

I don't even try to refi my primary anymore.  But I keep getting people that say "I can do it, we have a program!" or "try my guy, he's really good".  I don't think they quite realize what the tax return of some real estate investors look like.   But on the off chance I get that loan, I'll let you know.

What's more likley to happen is once I decide I don't want to buy anymore, I'll refi a commercial property in the low 4's and use that cash to just pay off my home.  Or just take money out of my bank making me 1% and "make" close to 6% via paying off my loan.