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Refinance Applications Spike as Investors Leave Europe: MBA

Investors fleeing Europe once more helped drive mortgage refinance applications to 3.8 percent this week, up from the week before, according to the ""Mortgage Bankers Association"":http://www.mbaa.org/default.htm (MBA).

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U.S. Treasury debt remains a draw for overseas investors as debt-saddled European countries grapple with a shakeup in their domestic politics over tough austerity measures.

Lenders benchmark interest rates for mortgage loans against Treasury yields, which fall when investors sop up bonds.

""Continuing negative developments in the sovereign debt crisis in Europe, particularly in Greece and Spain, as well as the recent French elections, which have shifted political power in a manner that will likely show less support for European austerity, helped push the US 10 Year Treasury yield below 1.7 percent last week,"" ""Michael Fratantoni"":http://www.mbaa.org/files/SpeakersBureau/FrantantoniM.pdf, VP of research and economics with the trade group, said in a statement.

The MBA's Refinance Index climbed 5.6 percent from the week before,

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signaling a rise for the third consecutive week and helping reach highs not seen since February earlier this year. The four-week moving average ticked up by 4.83 for the index.

The refinance share of mortgage activity leapt to 76.6 percent of total application volume, up from 74.9 percent the week before, making it the highest refinance share since March.

He said that the Home Affordable Refinance Program had less to do with a surge in refinance applications than investor interest, with government share of applications nearly unchanged over the last week as it hovered at 28 percent.

The MBA noted mixed results across much of the rest of the board for mortgage applications. Application volume went up 3.3 percent on a seasonally unadjusted basis.

Purchases went down. The Purchase Index saw declines of 3.6 percent, 4.2 percent lower than figures for applications seen at the same time last year.

The adjustable-rate mortgage share of activity fell from 5.4 percent to 5 percent from the week before, with government purchases waning over the week to account for 36.2 percent of all purchase applications, down from 36.3 percent, the second lowest share since March 2009.

Ongoing turmoil in Europe may slash exports jobs stateside and expose U.S. financial institutions to the credit crisis, but helps keep the housing market near all-time highs for affordability.

The ""National Association of Home Builders"":http://www.nahb.org/default.aspx found last week that 77.5 percent of all new and existing homes were affordable to families with median incomes of $65,000.

The trade group said that the figures set a new record, beating a previous one from the fourth quarter last year.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.
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