Home Loan Costs Fall, Mortgage Applications Rise

Home Loan Costs Fall, Mortgage Applications Rise

US mortgage home applications to buy and to refinanc increased last week as most borrowing costs fell in step with US bond yields tied to worries about slowing economic growth, data from the Mortgage Bankers Association showed on Wednesday.

The Washington-based industry group’s seasonally adjusted index on mortgage activity rose 2.3% to 384.0 in the week ended 8 March.

The gauge has risen 3 of the past 4 weeks.

The Refinance Index decreased 0.2% from the prior week. The seasonally adjusted Purchase Index increased 4% from one week earlier. The unadjusted Purchase Index increased 6% compared with the prior week and was 2% higher than the same week 1 year ago.

“Led by a 5.5% increase in FHA loan applications, purchase activity picked up last week and was almost 2% higher than a year ago,” said the Associate Vice President of Economic and Industry Forecasting.

“Purchase applications have now increased Y-Y for 4 weeks, which signals healthy demand entering the busy Spring buying season. However, the pick-up in the average loan size continues, with the average balance reaching another record high. With more inventory in their price range compared to 1st-time buyers, move-up and higher-end buyers continue to have strong success finding a home.”

The refinance share of mortgage activity decreased to 38.6% of total applications from 40.0% the prior week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.2% of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.64% from 4.67%, with points increasing to 0.47 from 0.44 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) increased to 4.45% from 4.41%, with points increasing to 0.34 from 0.25 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.02% from 4.08%, with points decreasing to 0.44 from 0.46 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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