Mortgage Applications Rise Significantly

By Liz Clinger Updated on 5/16/2012

For the week ending May 11, 2012 mortgage applications rose a significant 9.2%, a reaction from investors fearing the debt crisis in Europe and fleeing to U.S. Treasury securities according to an industry trade group on Wednesday.

The Mortgage Bankers Association believes the reaction to the debt situation in Europe was a cause of U.S. mortgage rates to hit record lows, which encouraged more borrowers to refinance their mortgage. The refinance index rose 13% from the previous week, and refinance activity overall raised to 74.9% of total applications, a 2.8% increase over the previous weeks 72.1%.  

The vice president of research and economics at the Mortgage Bankers Association, Michael Fratantoni, indicated that the HARP refinancing program had nothing to do with the jump in activity. According to him, surveyed participants indicated that the increase in refinance activity was concentrated in the conventional sector, up 14% for the week while government refinance applications only rose 4%.

While refinance activity is up, the seasonally adjusted purchase index fell from the previous week 2.4%.

Rates are also down, with average 30-year FRM’s with a conforming loan balance of $417,500 and less fell from its previous 4.01% to 3.96%, once again record breaking as the lowest rate in the survey’s history.  30-year jumbo rate fell 0.09% to reach 4.2% and FHA backed 30-year fixed rate mortgages fell to 3.75%. 15-year FRM declined from its previous 3.29% to 3.26% and 5/1 adjustable rate mortgages fell from 2.83% to 2.8%.