Demand for Mortgage Refinancing Sags

By:: Peter King | September 15, 2010

Mortgage applications fell this past week, driven by declining demand for mortgage refinancing among consumers.

Applications to refinance existing mortgages fell a seasonally adjusted 10.8 percent last week, according to the Mortgage Bankers Association, despite a slight decline in mortgage interest rates. Applications for mortgages to purchase a home fell by 0.4 percent, compared to the previous week.

The figures include an adjustment for the Labor Day holiday, as well as accounted for the usual seasonal factors.

Overall, refinance applications have declined an average of 1.4 percent a week over the past four weeks, despite mortgage interest rates that at or near record lows. Applications for home purchase mortgages have risen an average of 2.0 percent a week over the same period, as home sales struggle to bounce back after July’s sharp declines.

Refinance applications continued to dominate mortgage activity, making up four out of five mortgage applications.

According to the MBA survey, the average on 30-year fixed-rate loans fell to 4.47 percent, down from 4.50 percent the week before. The average on 15-year loans fell to 3.96 percent from 4.00 percent previously. However, the effective rate for both remained unchanged, due to increases in the average origination and discount points paid.

The MBA survey covers 50 percent of all residential mortgage applications and reflects mortgage applications with an 80 percent loan-to-value.

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