(Inman News Features) - Last year's boom in home mortgage refinancing has the potential to continue this year if interest rates remain at low levels, according to the Mortgage Bankers Association of America. Phil Colling, an economist with MBA, said the observation is based on the large amount of outstanding mortgage debt that may carry high rates and has not been refinanced yet by homeowners.
"There is currently about $5.7 trillion in home mortgage debt outstanding. According to MBA estimates, there were just over $2 trillion in home mortgage originations in 2001 and $1.5 trillion in originations in 1998, which were years with low mortgage rates. If $1.2 trillion of the originations made in 1998 are still on the books, then there are currently about $3.2 trillion in originations outstanding that were made in those years. That leaves about $2.5 trillion outstanding made in other years, and much of that mortgage debt may have been made at relatively high rates," Colling said.
Refinancing activity represented nearly 50 percent of total mortgage applications in this week's MBA survey, a level that has been sustained--plus or minus--for some time.