Mortgage Refinance Applications Surge on Falling Mortgage Rates

Mortgage brokers and loan officers are reeling from a surge of mortgage applications that have challenged their dwindled numbers. Fighting nearly a two year battle just to survive mortgage companies and banks are scrambling to handle the work load. A very nice Christmas present for mortgage bankers as mortgage refinance applications jumped 6.5 percent over the previous week.

The Federal Reserve and Treasury are taking actions to force the mortgage rates down, in hopes of increasing home buying. Unfortunately, the Mortgage Bankers Association's index of applications is showing just the opposite effect with mortgage applications for home purchases dropping 4.5 percent. This is likely a reflection of the jobs environment and uncertainty in many America's income.

Mortgage brokers are enthusiastic about the much needed business, but all are cautious about declaring a recovery. Mortgage approvals are likely to be far lower than inquiries. Although most America's can save on their payments at these rates or even rescue themselves from an impeding adjustable-rate mortgage (ARM) reset in payment--many have insufficient home equity to refinance.

The strength and longevity of this mortgage recovery will be tied to banks willingness and confidence to lend.

There are indications that banks, responding to this new consumer demand, are reconsidering significant cuts to jobs. Asked about plans to cut 30,000-35,000 employees over three years, Bank of America spokesperson DanFrahm gave an encouraging, "it has not been determined." While Regions, a Southeastern regional bank, has recently added staff to its Nashville, Tennessee processing center and USBancorp, a Midwest bank is also hiring.

There is little question the push to lower rates is causing a resurgence of consumers' interest in the housing market. Coupled with the heavily discussed jobs stimulus plans and this surge could be the trigger to an earnest recovery.