Refinances on the Decline?
According to a recent article in InmanNews, “Mortgage applications fell to their lowest level in more than 12 years last week as interest rates increased in advance of the Federal open market committee meeting that began on Dec. 17 and ended Dec. 18. This is according to the mortgage bankers Association report.”
This isn’t really surprising. We expected refinances and first home loan mortgages to decline as interest rates went up. But refinancing applications hit an all-time low which IS surprising.
Over the last several years the Fed’s purchases of treasuries and mortgage-backed securities helped push mortgage rates to record lows. Many of us experienced this and took advantage of it over the last 4-5 years. Even though these mortgage rates are still historically low, most of the homeowners that were eligible for a refinance have already completed the transaction. Many real estate mortgage brokers feel that this is one of the slowest seasons on record and there are a lot of mortgage refinance shots actually closing because they are just pretty much nonexistent in the loan pipeline.
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Purchase loans have dropped by 21% since last year. This is primarily due to the Federal housing administration’s increase in mortgage insurance premiums and tightened underwriting requirements.
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