HARP Shores Up Slowing Refinance Activity: MBA

A climb for mortgage rates last week cooled mortgage applications, leading overall volume to edge down by 2.7 percent.

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The ""Mortgage Bankers Association"":http://www.mbaa.org/default.htm (MBA) found in a weekly survey that the refinance share of mortgage activity also continued a six-week streak of declines, with a deflation from 73.4 percent of total applications to 71.9 percent last week.

""Mike Fratantoni"":http://www.mortgagebankers.org/files/SpeakersBureau/FrantantoniM.pdf, VP with the trade group, tells us that refinance activity could have been lower if not for recent modifications

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to the Home Affordable Refinance Program (HARP).

""We've had straight six weeks where the refinance index has dropped,"" he says, adding that the activity is ""solely a matter of mortgage rates flattening out, then increasing.""

The Refinance Index accordingly ticked down by 4.6 percent from the week before, falling to the lowest figures since December last year.

The MBA attributed the dip in a statement to a 12-percent decline in government refinance activity, with conventional refi applications down by 3.4 percent from the week before.

The seasonally adjusted Purchase Index inched up by 3.3 percent from the week before and 3 percent on an unadjusted basis.

Whither mortgage applications?

Fratantoni said that the MBA anticipates ""a big bump in home sales"" next year, as prices increase and distressed sales work their way through the market.

""Many people will see buying as the better option,"" he says. ""Right now we think that will happen in 2013, but not so much in 2012.""