Personal Finance

Refinancing Spikes as Mortgages Fall

Ann Carrns, The New York Times
Gordon Banks

Is it time to think about refinancing — or perhaps, re-refinancing?

Mortgage refinancing jumped to a three-year high, as interest rates on home loans dropped to new lows, according to a weekly industry survey from the Mortgage Bankers Association.

Mortgage applications overall increased 16.6 percent from one week earlier on a seasonally adjusted basis for the week that ended Sept. 28, according to the association’s Market Composite Index, a measure of loan application volume.

The survey covers more than three-fourths of all retail home mortgage applications in the United States, and has been conducted weekly since 1990.

The Refinance Index, meanwhile, increased 20 percent from the previous week. This was the highest refinance index recorded in the survey since April 2009.

“Refinance application volume jumped to the highest level in more than three years last week as each of the five mortgage rates in the M.B.A.’s dropped to new record lows in the survey,” Mike Fratantoni, the association’s vice president of research and economics, said in a prepared statement.

He said the markets are continuing to adjust as the Federal Reserve’s initiative to buy bonds known as mortgage-backed securities, dubbed “QE3,” pushes rates lower.

The refinance share of mortgage activity increased to 83 percent of total applications, from 81 percent the previous week.

The average interest rate for 30-year fixed-rate mortgages with “conforming” loan balances (meaning $417,500 or less) fell to 3.53 percent from 3.63 percent, while the average rate for 30-year fixed-rate jumbo loans (greater than $417,500) fell to 3.82 percent from 3.87 percent.

The average rate for 30-year fixed-rate mortgages backed by the Federal Housing Administration fell to 3.37 percent.

Those who can swing the monthly payments for a 15-year fixed rate mortgage saw the average rate decline to 2.90 percent.

Are low rates causing you to consider refinancing? Have you refinanced previously?