Mortgage Applications Soar. Rates Inch Up Slightly

If mortgage applications are the indicator of the over-all health of the real estate market place then last week proved to be a huge shot in the arm. Not only are week over week applications up, but year over year comparisons showed a drastic improvement. And it wasn’t driven by those seeking to refinance their homes. The mortgage application surge came from homebuyers!

Diana Olick with CNBC reports, “Mortgage applications to purchase a home drove total volume, rising 5 percent for the week, seasonally adjusted, and 17 percent compared with the same week one year ago. Purchase volume had been weakening, despite the fact that spring is historically the busiest season for homebuying.”

The information is derived from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. This survey has been conducted since 1990 and covers over 75 percent of all US home mortgage applications.

So with the sharp increase in mortgage loan applications, what type of rates and points were customers getting?

Ali Ahmad with the Mortgage Brokers Association reports, “The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 3.85 percent from 3.82 percent, with points increasing to 0.37 from 0.34 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.”

Ahmad goes on to say, “The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 3.82 percent from 3.74 percent, with points decreasing to 0.27 from 0.29 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.”

Something that is not mentioned in this report from the Mortgage Bankers Association is the “why” the increase of loan applications, especially against the backdrop of rising rates. As you may recall, last week Hitchcock Realty reported on “continued easing of lending standards on residential mortgage loans” according to Fannie Mae. (See Bad Economic Outlook Means Great Real Estate Prospects ).

The easing of lending standards will always drive mortgage applications. Easing the lending standards and increased loan applications will also always drive home prices to increase. These are things to consider if you are presently thinking about buying a home. And for the same reasons as well for the home seller. Now just may be the best time in a long time for buying or selling a home.

For more information about real estate along the Crystal Coast of North Carolina contact Margaret Hitchcock with Hitchcock Realty. Margaret is a Realtor with many years of successful experience. Call her today at (252) 269-2893.

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