During the week that ended January 8, fixed-rate mortgage loan rates dipped slightly to 5.13%. This fall in the current mortgage rates led to a jump in mortgage applications, particularly for refinancing.
Real estate experts have been predicting a rise in mortgage rates later in 2010, so homeowners interested in refinancing have been watching rates carefully. The Mortgage Bankers Association says refinancing applications went up by 21.8% from the week ending January 1 to the week ending January 8. Some of the increased application activity was also likely due to the post-holiday return to reality. Perhaps some homeowners were also immediately putting into action a New Year's resolution to get their finances in better shape, starting with lowering their mortgage payments.
Refinacings made up 71.5% of all applications last week, up from 68.2% the previous week. Adjustable-rate mortgages remain unpopular, representing just 4% of the market.
Fifteen-year fixed-rate loans average 4.45%, down slightly from 4.62% the previous week. One-year ARMs average 6.83% last week, up from 6.42% the previous week.
The above rates required an average of 1.17 points for the 30-year lona, 1.04 points on the 15-year loan and 0.31 point on the one-year ARM.
Given the drop in home values in some housing markets, borrowers may find they need to pay private mortgage insurance (PMI) when they refinance with less than 78 to 80% equity in their home. A lender can crunch the numbers to evaluate whether the refinance will still result in savings either on a monthly basis or over the course of the entire loan.
Written by Michele Lerner
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