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31 Oct 12 Rates Creep Higher and Loan Activity Stalling

Recent reports suggest that home financing activity is slowing down. Interest rates on home mortgages remains extremely affordable but rates have been inching higher in recent weeks. The Mortgage Bankers Association said its seasonally adjusted index of real estate loan application activity, which includes both home refinance and purchase demand, dipped 4.8% in the week ended October 26. The MBA’s seasonally adjusted index of house refinance applications dropped 6%, while the gauge of loan requests for house buying, a leading indicator of home sales, edged up 0.5%. According to the website, FHAHLR.com, “Refinancing with bad credit scores has been more strenuous for borrowers with today’s increased loan standards.”

Will Interest Rates Come Back to Record Levels?

The refinance share of total residential lending activity slipped to 80% of applications from 81%. Fixed rates on 30-year loans averaged 3.65% in the week. This indicated a rise of 2 basis points from 3.63% the week before. According to MBA the weekly survey covers over 75% of mortgage applications in all 50 states.

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01 Sep 10 Home Loan Applications Rise

Home loan applications increased 2.7% last week as more American consumers took advantage of the lowest rates in decades to lower their mortgage payments.   The Mortgage Bankers Association said Wednesday the increase was led by a 2.8% increase in refinance applications. The number of home mortgages taken out to purchase a home rose 1.8 %.

Mortgage refinance activity is at its highest level since May 2009 and makes up almost 83% of all new home mortgages, its highest share since January 2009.  However, home sales continue to struggle. Buyers are sitting out because they are worried about jobs or are deterred by strict mortgage requirements. New purchase loan activity is 40% below the levels seen at the end of April, when two federal tax credits for homebuyers expired.

Home loan rates have fallen since spring as investors, worried about the health of the global economy, seek the safety of Treasury bonds. That lowered their yield, and mortgage rates tend to track those yields. The average interest rate for a 30-year mortgage with a fixed rate fell to 4.43% from 4.55% a week earlier. Rates on the 15-year fixed-rate mortgage, a common refinancing option, decreased to 3.88% from 3.91%.

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