Refinance rush as mortgage rates set a new low

The Mortgage Bankers Association said Wednesday mortgage rates set a record low in the nation, with a fixed-rate, 30-year mortgage averaging about 3.47 percent for the week ended Dec. 7.

Mortgage activity was up last week by 6.2 percent compared to the prior week, with the increase due primarily to refinancing activity, which now accounts for 84 percent of the market. New purchase activity fell 4 percent for the same time frame, but is about 9 percent higher than a year ago.

Activity in the housing market continues to be dominated by those with homes and equity and those with access to 20 percent of the purchase price and solid credit histories.

“Continued uncertainty due to the lack of resolution regarding the fiscal cliff led interest rates lower last week, with mortgage rates reaching a new low in our survey,” said Mike Fratantoni, MBA’s Vice President of Research and Economics.  “Refinance activity increased, with the refinance index hitting its highest level in two months, and the refinance share reaching its highest level since January 2009.  Applications for purchase increased for a fifth consecutive week, and are running almost ten percent above their level at this time last year.”

Jumbo loan rates continue to chase after the conforming loan market. Rates for jumbo loans, those with loan balances greater than $417,500 dropped to 3.77 percent from 3.79 percent the previous week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 3.77 percent from 3.79 percent, with points increasing to 0.35 from 0.32 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.

Rob Varnon