Refinancing Bubble Bursting?, Activity Down 29%
NEW YORK, Dec. 5 (LendingIntelligence.com)– Mortgage brokers and economists said the refinancing boom may be over even if the Federal Reserve Board cuts interest rates further.
Refinancing activity came down 29% from the previous week, according to the Mortgage Bankers Association of America (MBA) Refinancing Index for the week ending Nov. 30, and figures to be released this week aren’t expected to be any better.
“I’m not trying to be the bearer of doom,” said Sanford Fischer, president of Mortgage Discounters, a Langhorne, Penn. brokerage. “But I think that the [refinancing] boom could potentially be over. I don’t tend to think activity is going to come back.”
Even though the Fed is expected to lower its overnight lending target at least another 25 basis points this year to 1.75%, mortgage rates shouldn’t move drastically.
“If the Fed makes another cut, it won’t have much of an effect on mortgages,” said Henry Willmore, chief U.S. economist at Barclays (MBA) . “I think we’re at the stage where the Fed is close to stopping, and mortgage rates have already taken the next cut into account.”
“You might see a couple of more dips, but I think you’ve seen the low for the year in November,” said A.W. Pickel III, president and chief executive of Leader Mortgage in Kansas City.
Refinancing activity represented 64.8% of total applications, decreasing from 72.9% the previous week. The average contract interest rate for 30-year fixed rate mortgages was 6.83%, from 6.98% the previous week. |
