FHA Loan refinance upswing may be on the horizon
7 octobre 2007 – 23:01Mortgage activity tumbled for the second straight week, according to a survey released today by the Mortgage Bankers Association (MBA). The MBA’s weekly report provides a snapshot of how many Americans in one week, as compared to the previous, applied for a mortgage to either purchase a home or refinance an existing mortgage. For the week ending September 28, overall activity fell 2.7 percent.
Although applications to purchase a home were down just 1.8 percent, the number of applications to refinance dropped 3.8 percent week-over-week.
Quicken Loans Chief Economist Bob Walters says purchase activity is indicative of recent housing trends, but an upswing in refinance activity is likely ahead. This is partially due to a renewed popularity of FHA loans, especially the FHASecure program aimed at helping people facing foreclosure because of a rising ARM payment. Plus, there are billions of dollars in adjustable-rate mortgages that are adjusting within 30 days. Refinancing to a fixed-rate mortgage will be a financially attractive solution for owners of these mortgages.
“In recent weeks we’ve seen month-over-month home sales drop to multiyear lows, so a corresponding drop in purchase activity is to be expected,” says Walters. “However, with $50 billion in adjustable rate mortgages resetting this month alone and mortgage programs like the FHA and FHASecure making it possible for more homeowners to refinance into a fixed rate mortgage, we should see a greater volume of refinance activity in the weeks ahead.”