Refinance Application Volume Plummet 11%

On March 31^ST, 2010, the Federal Reserve stopped the purchase of mortgage-backed securities. In the past year it has purchased 73% of the mortgages that government-backed Fannie Mae, Freddie Mac and Ginnie Mae have turned into securities and now holds a total of $909 billion of mortgage-backed securities. With the elimination of the Federal Reserve ceasing to purchase these mortgage-backed securities, interest rates have begun to rise. This spike in interest rates has caused a decline in refinance activity and has caused overall mortgage loan application volume to decrease by 11% for the week ending April 2, 2010, according to the Mortgage Bankers Association (MBA). As of Wednesday, the average contract interest rate for 30-year fixed-rate mortgage rose to 5.31 percent from 5.04 percent, and the average contract rate for 15-year fixed-rate increased to 4.54 percent from 4.34 percent according to MBA.

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