CFAH

Having inched down another half a percent over the past week, mortgage loan application volume in the U.S. is holding at a 25-year low, with applications to refinance down 85 percent on a year-over-year basis and purchase mortgage activity down 41 percent to a 7-year low, according to data from the Mortgage Bankers Association.

At the same time, the probability of the Federal Reserve raising the federal funds (“interest”) rate by at least another full percentage point by the end of the year is still holding at “100 percent,” with an 85 percent chance of a three-quarter point hike this afternoon.

And while it’s true that many, if not most, homeowners have been able to lock-in significantly lower mortgage rates than are on offer today, keep in mind that roughly 30 percent of the overall mortgage application volume last week was to refinance an existing loan and the share of applications for adjustable rate mortgages (ARMs) has ticked down to a little under 12 percent, representing the vast minority share of the market, as has historically been the case.

Comments from Plugged-In Readers

  1. Posted by Flurkyface

    “roughly 30 percent of the overall mortgage application volume last week was to refinance an existing loan” What has been the typical percentage over the years?

  2. Posted by DAA

    Trying to imagine under what circumstances refinancing today would be advantageous for someone. That many folks 5 years into their ARM?

    • Posted by Jimmy The Landlord

      I have two borrowers refinancing right now. Each have short-term (broker originated) hard money loans at 10% and 12% interest respectively and sub-50% LTVs. Now that they have finished construction, they are highly, highly motivated to get those crushing interest rates down to a more manageable 7%. If they don’t want to refi, they can always deed the property to me. It’s a win-win (meaning, I win in either case).

  3. Posted by SocketSite

    UPDATE: Purchase mortgage activity remained down 41 percent on a year-over-year basis last week and applications to refinance were down 87 percent, with 28 percent of total mortgage activity representing applications to refinance an existing loan and the share of applications for adjustable rate mortgages (ARMs) having inched up to 12 percent, representing the vast minority share of the market as has historically been the case.

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