Loan Refinance Demand Jumps

 

The connection between this surge in refinance demand and the average reported interest rate is tenuous as rates only moved down from 4.55 percent to 4.54 percent on average. The 4 week moving average of reported contract interest rates dropped from 4.5675 percent lower to 4.56 percent.

The Mortgage Bankers Association reported a significant increase in the number of refinance applications taken, purchase demand on the other hand declined slightly. 

Market Composite Index, which takes both purchases and refinances into account, rose by 15.5 percent to 556, it's fastest pace since March 4. The gain would have been less of an outlier had it not been for last week being the lowest index level since April.

The current report draws all its strength from refinance applications. MBA's refinance index rose 23.1 percent, its largest jump since January 2010 (the fastest week over week change in 2011 was seen in February at just under 18 percent). 

When looking closer at refinance activity, its 4-week moving average creates a more moderate picture. The previous four reports all showed decreasing demand. The uptick in activity ended that losing streak.

– Courtesy of Mortgage News Daily, Matthew Graham