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Refi Apps Still a High Percentage of Mortgage Totals

(8/30/10)

Rates once again have hit record lows as mortgage refinance applications reach their highest levels since January of 2009. The refinance market appears to be the only thing keeping mortgage lenders busy these days as a disproportionate ratio of refinance applications climbs to over 80% of all mortgage applications. It is possible that the Feds decision to utilize recent mortgage securities' proceeds to purchase Treasuries could bring rates down even further. Though rates have plummeted more than a full percentage point since the beginning of April and refinance apps have continued to soar since that time, the number of applications still remain 20% lower than that of the last interest rate bottom a year earlier. It is also likely the total mortgage volume for this year could be less than half of that of the highest year on record. It may be that the continued tightening of mortgage underwriting standards, along with complications arising from borrowers having second mortgage liens requiring what is called a subordination authorization in order to complete the loan, may leave some borrowers willingness to apply for yet another refinance loan somewhat weak.

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