Consumers rush to refinance, choose fixed-rate loans

Mortgage applications increased 12.8 percent for the week ending December 2 as consumers rushed to refinance loans at low interest rates, according to the Mortgage Bankers Association.

“Coming out of the Thanksgiving holiday, applications increased significantly as mortgage rates dropped to their lowest levels in about two months,” said Michael Fratantoni, MBA vice president of research and economics. “In particular, refinance applications increased sharply, with some lenders seeing refinance volume double.”

Some lenders indicated they are beginning to see an increase in HARP loans.

The Home Affordable Refinance Program (HARP) allows borrowers with mortgages that have loan-to-value ratios between 80 and 125 percent to refinance their loans if they are held by the government-sponsored enterprises Fannie Mae and Freddie Mac.

The refinance share of mortgage activity grew to 76 percent of total loan applications, up from 73.9 percent the previous week. In addition, the adjustable-rate mortgage share of activity declined to 5.7 percent from 5.8 percent of total applications from the prior week.

The average 30-year, fixed-rate mortgage rate on loans with balances less than $417,500 fell to 4.18 percent from 4.21 percent the previous week.