Originally published March 26 2005
Mortgage refinancing slows down as interest rates rise
by Mike Adams, the Health Ranger, NaturalNews Editor
The recent increase in mortgage rates has caused a decrease in the number of refinancing applications, and the number is expected to drop further. As the industry expects interest rates to continue to rise on both equity loans and mortgages for home purchases, many financial institutions are scaling back efforts in expectation of a further reduced demand.
Mortgage applications fell for a fourth straight week as refinancing waned, an industry report showed.
The Washington-based Mortgage Bankers Association said its weekly gauge of mortgage applications declined 0.7 percent to 704.8 in the week ended March 4 from 710.1 in the prior week.
Not since the middle of last year has the index fallen in as many weeks.
The gauge of refinancing applications declined 4.6 percent to 2176.8, the lowest since the week of Jan. 2 and a sign homeowners will rely less on home equity as a source of cash for additional spending.
"Volume is down and as a mortgage lender you have to adjust to the times by tapering back on staff," said Bob Moulton, president of Manhasset, N.Y.-based Americana Mortgage Group Inc. "I've cut my staff back from 20 people to 16 already this year."
The mortgage bankers' index of purchase applications rose 2.7 percent to 451.7, the highest since Dec. 24, from 440.
The gauge reached a high of 501.6 in January of last year.
The share of refinancing as a percent of all mortgage applications dropped to 42.6 percent, the lowest since the week ended Sept. 3.
The refinancing gauge has declined 78 percent since reaching a record in May 2003.
The mortgage bankers' survey covers approximately 50 percent of all retail residential mortgage originations and has been conducted weekly since 1990.
The base period is March 16, 1990, when the value for all indexes was 100.
In May 2003, before central bankers began raising rates, the percentage was about 34 percent.
Some economists forecast longer-term mortgage rates to rise later this year and keep a lid on home sales.
Anthony Chan, senior economist at JPMorgan Fleming Asset Management in Columbus, Ohio, expects 30-year fixed mortgage rates to reach as high as 6.7 percent this year.
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