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Wednesday, October 27, 2021

US Housing Market is On Fire, Mortgage Applications Increase as Buying Activity Spikes

#housing #market

Existing home sales are hitting the highest marks in 14 yrs, so, it is clear the US housing market is on fire.

Mortgage demand is rising again despite the highest interest rates in several wks.

Mortgage applications increased 6.8% from 1 wk earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.

The Market Composite Index, a measure of mortgage loan application volume, increased 6.8% on a seasonally adjusted basis from 1 wk earlier.

The Refinance Index increased 9% from the prior wk and was 86% higher than the same wk 1 yr ago.

The seasonally adjusted Purchase Index increased 3% from 1 wk earlier. The unadjusted Purchase Index increased 13% compared with the prior wk and was 25% higher than the same week 1 yr ago.

Mortgage applications activity remained strong last wk, even as the 30-yr fixed-rate mortgage and 15-year fixed-rate mortgage increased to their highest marks since late August.

Purchase applications were up over 25% from a yr ago, and the demand for higher-balance loans pushed the average purchase loan size to another record high.

The strong interest in home buying seen this Summer has carried over to the Fall.

Despite the uptick in rates, refinance applications increased around 9% and were almost 86% higher than last year. Both conventional and government refinance activity, and in particular FHA refinances, picked up last week.

The refinance share of mortgage activity increased to 64.3% of total applications from 62.8% the prior wk. 

The FHA share of total applications increased to 10.1% from 9.7% the wk prior.

“There is a general consensus among forecasters that mortgage rates will be flat or slightly lower in 2021 and this will continue to cause real estate prices to become relatively higher, compared to that in 2020, probably in the 5% range\depending on its geographical market. Because of this, the current trend towards suburban  versus metropolitan living will continue until there is a potential tested vaccine for the COVID-19 virus. According to Zillow, this also caused in June, the annual pace of home value growth to be 4.3% in urban areas and 4.1% in suburban areas. 

The Mortgage Bankers Association (MBA), an industry group, offered a similar forecast for home loan interest rates in 2021. But they expect them to inch upward a bit over the coming months.In its latest “Mortgage Finance Forecast” report, issued on July 15, the Mortgage Bankers Association’s (MBA) research team predicted that 30-year loans rates would average 3.2% and 3.3% during the last two quarters of 2020. Beyond that, they predicted an average of 3.4% for the first half of 2021.Interest rates will likely fluctuate up and down over the coming weeks, with the occasional downward or upward streak. That’s usually how it goes. But the big takeaway here is that economists have forecast a continuation of our current low-rate environment, with 30-year fixed mortgages hovering in the low-3% range through 2020 and into 2021.Complimenting this, according to Sam Khater, chief economist at Freddie Mac, in its most recent forecast for mortgage rates and home prices (published on June 16, 2020), their economic research team  predicted that 30-year rates would end up averaging 3.4% for 2020, and 3.2% in 2021″ says real estate industry expert Bruce WD Barren.

Have a healthy day, Keep the Faith!

Paul Ebeling
Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.   

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