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May 2nd, 2012

Mortgage rates still falling–refi applicants need to shop around



Mortgage and down paymentMortgage rates ended last week by inching their way down to new record lows, and according to HSH.com’s Weekly Mortgage Rates Radar, rates are still falling.

The average rate for conforming 30-year fixed-rate mortgages fell by 3 basis points (0.03 percent) to 3.97 percent, while conforming 5/1 hybrid ARM rates decreased by a single basis point, closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 2.92 percent.

“The economy seems to have moved to a slower-growth pattern as we entered the second quarter of 2012, and mortgage rates are finding a little space to fall,” said Keith Gumbinger, HSH.com’s vice president.

Looking to the months ahead, Gumbinger says it’s too soon to tell if this is just an economic bump in the road or if we’re headed for a more pronounced downturn.

HARP 2.0: Lender participation remains low

Several months back, we noted how important it was for mortgage rates to remain low as HARP 2.0 entered into the fold. Luckily for borrowers, mortgage rates have remained low.

But are more borrowers able to refinance thanks to the expanded HARP program coupled with historically-low mortgage rates?

Last week, the Federal Reserve released their quarterly Senior Loan Officer Opinion Survey for the first quarter of 2012.

Question 20 of the survey asked the following: “To what extent is your bank participating in the revised Home Affordable Refinance Program (“HARP 2.0”)?

The responses may or may not surprise you.

From the Federal Reserve survey:

All Respondents Large Banks Other Banks
Banks Percent Banks Percent Banks Percent
My bank is actively soliciting applications and is satisfying most demand as it comes in 16 30.2 13 39.4 3 15.0
My bank is not actively soliciting applications, but is satisfying most demand as it comes in 12 22.6 6 18.2 6 30.0
My bank has very little participation in HARP 25 47.2 14 42.4 11 55.0
Total 53 100.0 33 100.0 20 100.0

HARP 2.0 was revamped with the hopes that more borrowers and lenders would participate. For borrowers, HARP 2.0 removed underwater restrictions and streamlined the application process. For lenders, “perhaps the biggest change with HARP 2.0 is that the new guidelines specifically absolve refinancing lenders from responsibility for most mistakes made during the original mortgage underwrite,” wrote Dan Green, loan officer and author of The Mortgage Reports.

While the results of the Fed’s survey indicate only partial participation, Green said there’s still ample competition out there right now for HARP 2.0 loans.

“If your bank is giving you high HARP rates and you want to shop around, do it,” explained Green. “If your bank is telling you it’s too busy for your business, call someone else. It pays to ‘shop around’ when you’re shopping for HARP.”

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

Our bloggers:

Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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