mortgage rates Archives

Demand For Home Purchase Applications Up 29%

According to the Mortgage Bankers Association’s Weekly Applications Survey, home purchase application demand is now 29% higher than at the same time last year. And, because purchase application demand is considered a good indicator of future home sales, it could be a sign that there will be a sales bump coming in the months ahead. The encouraging news came during a week when demand for loans to buy homes was relatively flat from the week before and mortgage rates rose. In fact, average mortgage rates were up across all loan categories, including 30-year fixed-rate mortgages with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. Despite the slight increase, however, refinance demand was up from a week earlier and drove total mortgage application demand 1.2 percent higher than the week before. Analysts expect that the increase in refinance demand was due to expectations that the Fed may raise interest rates this month for the first time in nine years. The possibility of a rate increase has helped spur demand in recent weeks. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Mortgage Rates Hold Steady From Last Week

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were virtually unchanged last week from the week before. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances was down slightly, while jumbo loans remained unchanged from the previous week. Rates on loans backed by the Federal Housing Administration saw a minor increase and 15-year fixed-rate loans fell. Overall, mortgage rates have seen little movement over the past three weeks. But, because rates have plateaued at a higher level, refinance demand is slowing. In fact, last week’s Refinance Index was down 6 percent from the week before. Michael Fratantoni, MBA’s chief economist, told CNBC, refinance activity was down, even for a holiday week. “Volume always drops significantly during Thanksgiving week,” Fratantoni said. “However, even after adjusting for the holiday, with rates little changed last week, refinance volume slipped to its lowest level since late July.” On the other hand, demand for home purchase loans was up 8 percent. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Existing Home Sales Slip In October

After climbing almost 5 percent in September, sales of previously owned homes fell in October, according to new estimates from the National Association of Realtors. Total existing-home sales – which include single-family homes, townhomes, condominiums, and co-ops – dropped 3.4 percent from the month before, though they remain 3.9 percent above last year’s level. Lawrence Yun, NAR’s chief economist, said sales were expected to slow. “New and existing-home supply has struggled to improve so far this fall, leading to few choices for buyers and no easement of the ongoing affordability concerns still prevalent in some markets,” Yun said. Despite low inventory, however, Yun believes sales will continue to see gains. “As long as solid job creation continues, a gradual easing of credit standards, even with moderately higher mortgage rates, should support steady demand and sales continuing to rise above a year ago.” Also in the report, the share of first-time home buyers rose in October to 31 percent, up from 29 percent in September. All cash sales were 24 percent of total transactions, while distressed sales declined 6 percent from the month before. More here.

Experts Expect Rebound As End Of Year Nears

The economy and housing market are showing encouraging signs as the end of the year nears. In fact, according to Fannie Mae’s Economic & Strategic Research Group, the economy should see a strong fourth quarter finish, despite the recent loss of economic momentum. A combination of higher hourly earnings and lower unemployment numbers is making Americans feel more financially stable, which should lead to increased consumer spending. That’s a positive sign for the economy and the residential real estate market as well. “Despite mixed housing and mortgage market data, our forecast for housing activity is little changed over the past two months,” said Fannie Mae chief economist Doug Duncan. “The supply of existing homes remains lean amid slowing new single-family construction, putting significant upward pressure on home prices. While this helps boost home equity, it hurts affordability, especially for potential first-time home buyers.” Fortunately, Fannie Mae is forecasting only a gradual increase in mortgage rates through next year and expects rising household incomes to lessen the impact of higher home prices. More here.

Mortgage Rate Increases Spur Activity

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates increased last week across all loan categories, including 30-year fixed-rate mortgages with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. But, despite being the fourth consecutive week rates moved higher, demand for mortgage applications still increased from the previous week. In fact, the seasonally adjusted Purchase Index – which is a good indicator of future home sales – jumped 12 percent from one week earlier and the Refinance Index was up 2 percent. Jonathan Corr, CEO of Ellie Mae, told CNBC that rising mortgage rates may be spurring people to act now in case rates continue to rise. “What we are seeing is refinances increasing as we anticipate interest rates going up,” Corr said. “It’s a great accelerator and motivator for many people. This month we saw the third-consecutive month of refinance volume increases.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Builder Confidence In New Home Market Still High

The market for newly built single-family homes is an important barometer of the housing market’s health overall. Because of this, the National Association of Home Builders surveys builders each month and asks for their perception of current sales conditions, buyer traffic, and expectations for the next six months. The Index is measured on a scale where any number above 50 indicates more builders view conditions as good than poor. In November, it fell three points to 62. But despite the month-over-month decline, the Index has now been above 60 for six consecutive months and, according to NAHB’s chief economist, David Crowe, the real estate market is headed for continued improvement. “The November report is pullback from an unusually high October, and is more in line with the consistent, modest growth that we have seen throughout the year,” Crowe said. “A firming economy, continued job creation, and affordable mortgage rates should keep housing on an upward trajectory as we approach 2016.” Regionally, three-month moving averages show all four regions in positive territory. The West increased four points to 70, while the Northeast reached 50 after a three point gain. The Midwest and South were unchanged at 60 and 65, respectively. More here.

Mortgage Demand Flat As Rates Move Up

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates moved up last week across all loan categories, including 30-year fixed-rate mortgages with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. It was the second consecutive week mortgage rates rose. The increase caused demand for mortgage applications to fall from the previous week’s level. In fact, the Market Composite Index – which measures both refinance and purchase activity – fell 0.8 percent from the week before, with both the Refinance and Purchase Index registering a 1 percent decline. Despite the drop, however, demand for loans to purchase homes was still 20 percent higher than one year earlier. That improvement points to a significant increase in home sales over last year. Since mortgage application demand is an important indicator of future housing demand, any increase in the number of purchase loans indicates sales will also rise. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Rising Household Net Worth Boosts Economy

Recent data paints a mixed picture of today’s housing market. On the one hand, pending and new home sales both fell in September. On the other, existing-home sales, housing starts, and builders confidence all rebounded. Combined with recent news of economic volatility and slower growth, it may be difficult to figure out where things stand. According to Fannie Mae’s Economic & Strategic Research Group, however, things aren’t as complicated as they may seem. In fact, the group – which releases an updated forecast for the economy and housing market each month – says things are still moving in a positive direction, despite the ups-and-downs found in the latest data. “Despite recent headwinds, which likely will slow economic growth compared to the first half of 2015, we see positive trends for consumer spending and housing heading into the fourth quarter,” Doug Duncan, Fannie Mae’s chief economist, said. “Strong home price gains should help drive an increase in household net worth again in the third quarter, and, combined with low gasoline prices and mortgage rates, should support strong consumer spending throughout the rest of the year.” In other words, the strength of recent price increases has boosted the average American homeowner’s net worth, which should help drive consumer spending and the overall economy through the end of this year. More here.

Real Estate Rebound Continues On Track

Freddie Mac’s Multi-Indicator Market Index measures the real estate recovery by comparing current data to long-term norms in local markets across the country. The index tracks home purchase application data, payment-to-income ratios, proportion of on-time mortgage payments, and the local job market in all 50 states and the top 100 metropolitan markets. According to the most recent results, the housing market’s rebound is on track and has entered the outer range of stable housing activity. In fact, 29 of 50 states are now in a stable range, along with 47 percent of the top metro areas. Freddie Mac’s deputy chief economist, Len Kiefer, says housing markets across the country are getting back to their long-term benchmark averages. “The nation’s housing market continues to improve, riding the wave of the best year in home sales since 2007,” Kiefer said. “With the MiMi purchase applications indicator at its highest level in more than seven years, we expect home sales to remain strong. Low mortgage rates are fueling the recovery across the country. Places like Denver, Austin, and Salt Lake City, and most markets in California, are seeing robust home purchase demand and, in many cases, double-digit growth over last year.” Despite the rosy outlook, however, Kiefer also cautions that there’s still room for improvement and income growth will have to be stronger to sustain the gains throughout 2016. More here.

Rumored Rate Hike Won’t Scare Buyers Away

Whether or not the Federal Reserve will raise interest rates has been a topic of interest among industry analysts for a while now. Speculation has risen before each meeting of the Federal Open Market Committee, which is the branch of the Federal Reserve Board that determines monetary policy. Mostly, this is because real estate analysts fear the affect higher mortgage rates would have on affordability conditions might scare potential home buyers away. Lower-than-normal mortgage rates have, after all, played a significant role in fueling the housing market’s rebound over the past few years. But, according to Trulia chief economist Selma Hepp, this fear is unrealistic. Hepp writes, “When the Feds decide to raise rates, any increase will be nominal and gradual. The anticipation is that the initial increase will be only 25 basis points (e.g. from 3.75% to 4.00%).” In other words, Hepp believes an increase of that size wouldn’t affect home sales due to the fact that rates would still be historically low and favorable to home buyers. But, though this may be true, it likely won’t calm speculation when the next chance for the Fed to raise rates comes during the committee’s final meeting of the year in December. More here.