Refinancing Back on Top.(mortgage refinancing)(Brief Article)(Statistical Data Included)

With 30-year mortgage rates once again stuck below 7%, lenders saw another wave of refinancing activity pick up in June and July.

In mid-July, refinancing accounted for just over 50% of new loan applications, according to the Mortgage Bankers Association of America. It was the third week in a row that refinancing had topped 50% of the market.

It's not difficult to see why refinancing has been heating up again. In the week ending July 12, Freddie Mac reported that the national average commitment rate on 30-year, fixed-rate mortgages was 6.54%, the lowest reported since last November.

However, the market is starting to show some signs of "burnout" as the pool of borrowers with higher interest rate loans diminishes. While refinancing has cracked the 50% mark again, it's no where near the level it reached last fall, when similar interest rates drove refinancing as high as three quarters of loan applications during some weeks.

As a result, the MBA predicts that total mortgage origination volume will fall 16% this year from last year's record, even as home purchase lending surges to a new record of nearly $1 trillion.

That will drive a lot of refinancing, but it will still not push refinancing up to last year's level, Freddie Mac economists said in a recent commentary.

But for anyone who thinks refinancing is over should probably think twice. Doug Duncan, chief economist of the Mortgage Bankers Association of America, says a number of factors have driven rates down, and he does not expect the Fed to begin raising short-term rates until at least November.