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Wednesday, March 21, 2012

MBA: Mortgage Refinance activity slows as rates rise, "Sand States" now "HARP states"

by Calculated Risk on 3/21/2012 08:01:00 AM

From the MBA: Interest Rates Highest Since December, Applications Decrease in Latest MBA Weekly Survey

The Refinance Index decreased 9.3 percent from the previous week. The seasonally adjusted Purchase Index decreased 1.0 percent from one week earlier.
The refinance share of mortgage activity decreased to 73.4 percent of total applications, the lowest since July 2011, from 75.1 percent the previous week.
"With the rate increase last week, refinances are obviously slowing, and the refinance share at 73% is down to its lowest level since last July. With rate/term refinances falling as we go forward, HARP will be a bigger percentage of refinances but will be more concentrated in certain states," said Jay Brinkmann, MBA's Senior Vice President of Research and Education. Brinkmann continued, "Some of the largest institutions are reporting that the HARP share of their refinances remained at about 30% last week, but HARP volume is not equal across the country. The states that I started referring to years ago as the sand states that had the worst delinquencies we now should start calling the HARP states for mortgage refinances. We saw big state-level differences in refinance applications for February over January: Florida was up 49%, Arizona was up 61%, and Nevada was up 71%. Refinances in the rest of the country were generally flat or even down. For example, Texas had no change, Colorado was down 3%, Connecticut was up only 2%, and Virginia was up 1%. HARP clearly is a driving force in those states that saw the most defaults and the biggest drops in home equity."
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 4.19 percent from 4.06 percent,with points increasing to 0.47 from 0.43 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The purchase index was only off slightly - and this doesn't include the high percentage of cash buyers.