Mortgage refi action is strong but slowing; rates dip again

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The mortgage refinancing boom continues to roll along at a strong pace, although the rate of increase in refi applications has slowed sharply as loan rates appear to be leveling off.

The Mortgage Bankers Assn.’s index of refi activity edged up 3.7% last week, seasonally adjusted, after rocketing by double-digit percentage amounts the three previous weeks, the group said today.

The index still is 11% below its recent peak reached in mid-January, when conventional mortgage rates first fell below 5%.

Loan rates hit a new low last week, the MBA said, although the decline from the previous week was slight: The average contract rate for 30-year loans dipped to 4.61% from 4.63%, the group said.

The 30-year loan rate has tumbled from 5.07% in early January as the Federal Reserve has ramped up its efforts to push down mortgage costs by buying mortgage-backed securities in the open market.

Although refis have soared, the MBA index that measures loan applications for home purchases has risen only modestly in recent weeks, despite the plunge in loan rates.

The purchase-loan index edged up less than 0.1% last week and is up just 14% since reaching an eight-year low the week of Feb. 6 -- even though home affordability, as measured by a National Assn. of Realtors index, is at its highest level since the group created the index in 1981.

-- Tom Petruno