Exhausted Population of Borrowers--ZT

Refinancing applications surprisingly dropped last week, despite the fact that primary mortgage rates indicators remained stable or declined. The MBA's refi index (the best measure of activity) dropped by more than 20% week/week, and reported at its lowest level since the week ending March 13th (before the Fed's announcement of its Treasury purchase program). Application activity softened in spite of a drop in the Freddie Mac survey rate, which matched its all-time low of 4.78%.

Three possible causes for this decline:

1) the MBA's report is an aberration (possible);
2) the posted averages for mortgage rates are understating the actual rates quoted borrowers (unlikely); and/or
3) Borrowers are being told that they can't refinance due to credit or equity issues (likely).

If the last factor is the culprit, it means that the primary mortgage market is beginning to exhaust the available population of borrowers that have the credit, means, and equity to refinance. Lenders and brokers should keep an eye on these numbers over the next month or so, as it could be a good leading indicator of how robust activity will be as we approach the summer.

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The rate will go lower when a lot of quality borrowers -CALoanAgent- 给 CALoanAgent 发送悄悄话 CALoanAgent 的博客首页 (352 bytes) () 05/01/2009 postreply 10:50:00

these banks... -比花花还花- 给 比花花还花 发送悄悄话 比花花还花 的博客首页 (469 bytes) () 05/01/2009 postreply 12:10:54

Thanks for the info. So, there is no big hurry to refi now. -xxq2001- 给 xxq2001 发送悄悄话 xxq2001 的博客首页 (0 bytes) () 05/01/2009 postreply 16:19:24

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