Major increase in refinancing

Due to several government bailouts, mortgage applications doubled as refinancing was made more appealing. The Federal Reserve had recently announced that they would buy debt and mortgage-backed securities from Fannie Mae and Freddie Mac. Orawin Velz, the associate vice president of economic forecasting, said that as a result, "Many of those on the sidelines decided to quickly jump in and take advantage of lower rates before they began to rebound,". 15-year fixed mortgage rates went from 5.78% to 5.13% and rates on one-year adjustable-rate mortgages, went from 6.87& to 6.61%.

According to a weekly report from the Market Composite Index, which measures loan application volume, last week´s numbers grew 112.1% from the previous week. While that figure was seasonally adjusted to account for Thanksgiving, the unadjusted figure showed a 51.4% increase, which is down 21.9% from last year.

These changes while beneficial for buyers, were more suited for those wanting to refinance. The Refinance Index report, showing that refinancing volume increased from 203.3% to 3802.8%, while the Purchase Index only increased 37.4%. A real estate//interest rate analyst with Weiss Research, Mike Larson, remarked on the data, stating that "While purchasing a home is a big commitment, refinancing is often a no-brainer,...You may be less inclined to go buy a house in this weak economy. Refinancing will go forward if the gains can hold." Rates are currently lower due to the lenders imposing higher standards, as a result, buyers experience more difficulty getting approval due to not having the required amount of equity, thus buyers are forced to apply and reapply, making the mortgage application index seem to be rising while in fact it is not.

For more information about home buying in Maine, visit http://www.michaelmullett.com/.