Storms Put a Hold on Mortgage Demand

Mortgage applications suffered a big drop in the wake of Superstorm Sandy last week, with the impact felt almost equally in refinancing and home purchase applications.

Overall mortgage demand dropped by 5.0 percent last week, according to figures released today by the Mortgage Bankers Association (MBA), with steep declines in East Coast states affected by the storm. Both refinance and purchase applications were down 5 percent in absolute terms, though seasonal adjustments put the drop in refinance demand at 7 percent compared to the previous week.

Mortgage applications were down by 60 percent in New Jersey compared to the previous week, according to Mike Frantantoni, an MBA economist, and fell nearly 50 percent in New York state and nearly 40 percent in Connecticut, with lesser declines in other East Coast states.

Meanwhile, many other parts of the country saw increased mortgage demand, Frantoni said, although figures for specific areas were not provided.

Refinancing continued to account for 80 percent of all mortgage applications, while HARP refinancings increased to 27 percent off all refinancing applications, up from 25 percent the week before.

Mortgage rates trend down slightly

Sandy suppressed mortgage demand during a week that saw modest declines in mortgage rates, which typically tend to boost refinance demand. Average interest rates reported by the MBA on standard 30-year fixed-rate mortgages fell to 3.61 percent from 3.65 percent the week before, with an average of 0.45 points in fees and discounts.

The average rate on 30-year FHA mortgages dropped to 3.37 percent with 0.75 points, down from 3.41 percent the week before. For jumbo mortgages (loan amounts greater than $417,500), the average rate on 30-year fixed-rate loans fell to 3.88 percent with 0.36 points, down from 3.91 the week before.

Interest rates on 15-year fixed-rate mortgages, which are widely used for refinancing older loans, were unchanged at an average of 2.95 percent, with 0.40 points.

All averages are based on mortgages with an 80 percent loan-to-value ratio.

First published at: http://www.mortgageloan.com/mortgage-demand-drops-sandys-wake-9288