Mortgage applications jump on refinancing demand: MBA (Reuters)

NEW YORK (Reuters) – Applications for U.S. home mortgages surged last week, driven by increased refinancing demand as interest rates dropped, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, climbed 10.3 percent in the week ended Nov 4.

"Treasury rates dropped last week, as renewed turmoil in Europe once again led to a flight to quality, and 30-year mortgage rates dropped to their second lowest level of the year," Mike Fratantoni, MBA's vice president of research and economics, said in a statement.

The MBA's seasonally adjusted index of refinancing applications rose 12.1 percent to its highest level in a month. Fratantoni said some lenders saw even bigger increases. Fixed 30-year mortgage rates dropped 9 basis points to average 4.22 percent.

The refinance share of total mortgage activity rose, after declining for three weeks, to 78.6 percent of applications from 77.1 percent the week before.

The gauge of loan requests for home purchases gained 4.8 percent.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

(Reporting by Leah Schnurr; Editing by Leslie Adler)

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Officials, banks to tackle mortgage refinancing plan: report (Reuters)

(Reuters) – Officials and big banks are working on a plan that would make refinancing available to some borrowers whose houses are worth less than their loans, so long as they are current on mortgage payments, the Wall Street Journal reported.

Such borrowers typically are not able to refinance because they lack equity in their homes. The plan would apply only to mortgages owned by the banks, the Journal said, citing people familiar with the matter.

Federal officials have been trying to broker a settlement with the five largest mortgage servicers - Ally Financial Inc, Bank of America, Citigroup Inc, J.P. Morgan Chase and Wells Fargo & Co -- the Journal said.

It is not clear how many borrowers would qualify for help, the paper added.

Officials are pushing for a plan in a bid to break a legal impasse with big banks over alleged foreclosure abuses and ease problems in the housing market, the paper said.

Discussions are still fluid and any final outcome is uncertain. Talks between government officials and the banks are expected to continue this week, the newspaper said.

JPMorgan declined to comment to Reuters on the Journal report. Reuters could not immediately reach the other four lenders for comment outside regular U.S. business hours.

(Reporting by Sakthi Prasad in Bangalore; Editing by Vinu Pilakkott)

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More homeowners refinancing into shorter loans: survey (Reuters)

NEW YORK (Reuters) – More homeowners prefer to pay off their mortgages sooner as interest rates have stayed near rock-bottom and weak labor conditions have caused them to reduce their debt loads, a survey showed on Monday.

The current trend in refinancing into shorter-loan terms is a stark contrast to the one during the height of the housing boom, when families were taking out bigger mortgages against the rising values of their homes.

Of those homeowners who refinanced a 30-year fixed-rate mortgage during the second quarter, 37 percent moved into a 15-year or 20-year fixed-rate loan. This is the highest since the third quarter of 2003, mortgage finance agency Freddie Mac (FMCC.OB) said.

In the second quarter, interest on the 30-year mortgage averaged 4.65 percent, compared with a 3.84 percent average on 15-year mortgages, the company said.

"It's no wonder we continue to see strong refinance activity into fixed-rate loans," Freddie Mac Chief Economist Frank Nothaft said in a statement.

Refinancing has comprised the bulk of U.S. mortgage activity since the housing bust that led to the 2007-2009 global financial crisis.

During the second quarter, the refinance share of mortgage applications, versus the share of applications for loans to buy a home, averaged 70 percent, Freddie Mac said.

(Reporting by Richard Leong; Editing by Dan Grebler)

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