Interest in Refinancing Dwindles

By:: Peter King | December 01, 2010

Homeowners’ interest in refinancing their mortgages continues to decline, as 30-year loan rates rose for the third consecutive week, according to figures reported today by the Mortgage Bankers Association (MBA).

Applications to refinance an existing mortgage took a big drop last week, falling a seasonally adjusted 21.6 percent, according to today’s weekly MBA survey. It was the third weekly decline in a row for the MBA’s Refinance Index, which is at its lowest level since last June.

Average interest rates on 30-year fixed rate mortgages rose to 4.56 percent in the MBA survey, up from 4.50 percent the week before. Interest rates on 15-year fixed-rate loans rose to 3.91 percent, up from 3.83 percent last week.

The MBA Refinance Index has dropped an average of 8.2 percent a week over the past four weeks, as interest rates headed up from all-time lows. Meanwhile, applications for mortgages to purchase a home have been gradually increasing, at least on a seasonally adjusted basis.

The MBA’s Purchase Index rose 1.1 percent last week, reaching its highest level since last May. The Purchase Index, which is seasonally adjusted, has risen an average of 3.8 percent a week over the past four weeks. In absolute terms, home purchase mortgage applications are up 2.7 percent from the same week one year ago.

Interest rates on both types of fixed-rate mortgages have now risen more than a quarter of a percentage point over the past three weeks, according to the MBA survey. During that time, the ratio refinance applications have declined to just under 75 percent of all mortgage applications, down from over 80 percent previously, with purchase applications taking a bigger share of the market.

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