The latest numbers from the Mortgage Bankers Association show that a the refinancing boom is more than a flash in the pan.
"It's a boom all right," said David Lereah, the association's chief economist. "About 46% of applications are currently for refis. The number was as high as 53% a few weeks ago, and if interest rates stay at these lofty levels, it will come down to about 40%. But that's still a lot of refis."
He was referring to the fact that rates, while still historically low, have climbed in recent weeks from the lowest levels in a long, long time.
The MBA's weekly index of applications shows refinancings continuing above the 1,000 mark. A year ago, applications for refinancing were producing an index number of roughly 100, or about the same as in the base period six years ago. This pattern holds true for the raw numbers as well as the seasonally adjusted indexes.
And the expectation is that the high level of refis will continue. "Bond rates stabilized this week," Robert Van Order, chief economist at the Federal Home Loan Mortgage Corp., observed on Friday. "With no particular news about the economy, interest rates should remain stable in the near future."
Despite the low level of rates, adjustable-rate mortgages are also showing high index numbers. Application volume has been roughly double that of a year ago in the conventional market. But Mr. Lereah cautioned that the numbers involved were small and not especially significant.
Mr. Lereah noted that ARMs were accounting for less than 20% of all applications for conventional loans and less than 15% for government loans. Interest rates on 30-year, fixed-rate loans have dropped about 12 basis points more than rates on adjustables, and the difference is even larger for shorter-term fixed-rate loans.
In its weekly survey, Freddie Mac found that the Northeast continued to have the lowest commitment rates for 30-year, fixed loans, at 7.34% on average.