Refis Bounce Back, Defying Forecasts and Higher Interest Rates
By JOSHUA BROCKMAN
Many in the mortgage industry have predicted a slowdown in refinancings this year, but the latest statistics show refis on the rise.
The Mortgage Bankers Association refinance index finished the week of Jan. 29 at 1,741.7, its highest level since Dec. 18. Refinancing activity accounted for 53.4% of applications.
The index rose despite increases in mortgage interest rates. The average rate on a 30-year fixed loan for 80% of value hit 6.75%. One-year adjustables inched up to 6.18%.
"There's still quite a bit of demand for refinances," said David A. Sayers, vice president of retail banking for Katahdin Trust Co. in Patten, Maine.
But Dale Westhoff of Bear, Stearns & Co. said the recent rise in the index-from 1,500 to 1,700-is not very significant, considering that it was above 4,000 back in October.
"We expect it to bounce around between 1,500 to 2,000 range if rates stay at these levels," said Mr. Westhoff, the firm's senior managing director for mortgage research.
Mr. Sayers and other lenders said they expect slowing of the economy in the second half, which might lead to a further Fed rate cut and another surge of refinancing business.
Others said refinancings are beginning to decline, despite what the index seems to indicate.
HomeBanc Mortgage Corp.'s refinancing business has dropped by 30% from a year ago, reflecting "the beginning of the end" of the refinance boom, said D. …