Last Friday the Mortgage Banker’s Association (MBA) mortgage applications survey found that refinance applications skyrocketed and purchase applications took a nose-dive as mortgage rates hit their lowest levels since November 2009.
The report found that total mortgage applications fell 1.5 percent on a seasonally-adjusted basis. Purchase activity hit a 13-year low, decreasing by 27.1 percent from the previous week, while mortgage refinancing rose 14.5 percent week-over-week. Nearly 70 percent of all mortgage activity last week was refinancing.
Purchase activity is down 20 percent over the past month, coinciding with the expiration of the first-time home buyer tax credit. Only time will tell whether the tax credits induced new home sales or just pushed home sales from the summer into the spring.
The average 30-year fixed mortgage rate was 4.83 percent last week. The largely unanticipated debt crisis in Europe has caused investors to flee the stock markets for the safety of U.S. Treasury issues. Bond yields fell, and mortgage rates went along with them.
With the uncertainty that surrounds the situation in Europe, we expect to see continued volatility in mortgage rates. In the long run, interest rates will rise, but in the short term low rates present excellent opportunities to purchase or refinance a home.
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