Good Morning. When rates click over 5.75%, applications slow and over 6% on 30-year fixed product, the mortgage market seizes. In the good 'ol days, exotic programs would fill the void because many programs, such the Pay Option ARM, were impervious to rate increases...remember it is all about the monthly payment. Two things to consider here when reading the link below; the 6.04% average rate they quote is not reality because at 'no-points' it is closer to 6.25% on a $417k loan and 7.0% on an new Agency 'Con'-Jumbo; and the number of applications that actually close remains extremely low, hovering around 40% from research I have done at four national banks.
This ties in nicely with the report I posted a few days back that was highly ridiculed by some but now looks extremely accurate and foresighted called 'NEW FANNIE/FREDDIE 'CON' JUMBOS ALREADY A BUST' http://mrmortgage.typepad.com/blog/2008/04/new-fanniefredd.html - Best, Mr Mortgage
*(Reuters) NEW YORK - Mortgage applications plunged last week, largely reflecting a drop in demand for home refinancing loans as interest rates surged, an industry group said on Wednesday. http://www.reuters.com/article/ousiv/idUSNAT00395920080423?sp=true