Will A Refinance Wave Revival Take Place In 2007?
Many are wondering if the current state of the economy is swelling to produce a new refinance wave. Recent news and economic reports reveal a plausible possibility of a significant increasing in refinancing providing mortgage rates take another deep dip as it did in recent weeks.
The Market Composite Index
The Mortgage Bankers Association (MBA) reports that refinance applications hit highest levels in over a year. The Market Composite Index, a measure of mortgage loan application volume, was 721.2, an increase of 11.4 percent on a seasonally adjusted basis from 647.6 one week earlier. On an unadjusted basis, the Index increased 10.2 percent compared with the previous week and was up 22.2 percent compared with the same week one year earlier.
The seasonally adjusted Refinance Index increased by 15.8 percent to 2304.4 from 1989.7 the previous week and the Purchase Index increased by 8.7 percent to 463.8 from 426.6 one week earlier. The Refinance Index is at its highest level since September 2005
Refinance Activity VS Mortgage Activity
The Mortgage Bankers Association (MBA) reports:The substantial decline in mortgage rates over the past six months, greater than 80 basis points in total, has led to a significant increase in refinance activity. The reports continues to point out that the refinance share of mortgage activity increased to 52.6 percent of total applications from 50.1 percent the previous week. The refinance share is at its highest level since April 2004.
How will this impact home refinance activity? If competitive refinance rates remain below 6% expect a significant increase in home refinancing following the sensation produced by the next Fed rate cut.