According to this week’s Weekly Application Survey from the Mortgage Banker’s Association, mortgage applications increased slightly from the previous week, rising 2.7 percent (seasonally adjusted). Refinance activity increased again, and is up 2.8 percent (seasonally adjusted) from the week prior. Refinance applications are now at their highest point since May of 2009. Purchase applications also rose, and are up 1.8 percent (seasonally adjusted) from the previous week.
Excerpted from the survey:
“Refinancing activity picked up again last week, reaching new 15-month highs, as borrowers took advantage of even lower mortgage rates. The drop in mortgage rates was in line with Treasury rates as the latest data continue to show weak economic growth and an exceptionally weak housing market,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “The sharp decline in MBA’s Purchase Application index in May had provided a clear leading indicator of the drops in new and existing home sales that were reported for June and July. Despite the slight increase in purchase activity in the past week, the continued low level of purchase applications indicates we are unlikely to see an increase in new home sales reported for August or existing home sales reported for September.”
The continuing increase in refinance activity is not surprising, as mortgage rates continue to hit all-time lows. According to Zillow, the average rate on a 30 year fixed rate mortgage is now 4.26 percent. According to Freddie Mac the average rate is 4.36 percent (I believe the discrepancy comes from the methodology used to ascertain the average rate).
While purchase applications increased a little bit, they are still close to 15 year lows. This is also anticipated based upon the collapse in demand for housing and very weak labor market (U-3 unemployment is still at 9.5 percent and broader measures of unemployment are above 16 percent).
Until we see any real improvements in the labor market, we are unlikely to see purchase applications increase significantly and we are unlikely to see substantial improvement in the housing sector as a whole.
Loading ...
RSS feed for comments on this post.
Leave a comment