Full Work Week and Rate Rally Boost Mortgage Apps

 

Mar 5 2014, 8:45AM

The volume of mortgage applications increased during the week ended February 28 for the first time since late January.  This good news was muted slightly by the fact that the previous week had been a holiday for many with government offices and schools closed.

The Mortgage Bankers Association said its Market Composite Index increased 9.4 percent on a seasonally adjusted basis from the week ended February 21 and 11 percent on an unadjusted basis.  The seasonally adjusted Purchase Index was 9 percent higher than the previous week but MBA noted that week was not adjusted to account for the President’s Day holiday.  The seasonally adjusted Purchase Index during the most recent week was 6 percent above the level during the last non-holiday week which ended February 14.  The unadjusted Purchase Index was 19 percent lower than during the same week in 2013.

Purchase Index vs 30 Yr Fixed

The Refinance Index was up 10 percent from the holiday week but was 3 percent lower than two weeks earlier.  Refinancing had a market share of 57.7 percent compared to 58 percent the previous week, the lowest since last September.

Refinance Index vs 30 Yr Fixed

Both average contract and effective rates decreased last week for all mortgage products.  The average contract interest rate for a 30-year fixed-rate mortgage (FRM) with a conforming loan balance of $417,000 or less decreased to 4.47 percent with 0.28 point.  The previous week the rate was 4.53 percent with 0.31 point.

Jumbo 30-year FRM (loan balances in excess of $417,000) had an average rate of 4.37 percent, 10 basis points below the average rate the previous week.  Points increased to 0.20 from 0.13.

Thirty-year FRM carrying FHA guarantees had an average rate of 4.13 percent with 0.13 point.  The previous week the average rate was 4.17 percent with 0.20 point.

The rate for 15-year FRM was 3.52 percent, down 4 basis points from the previous week.  Points decreased to 0.18 from 0.28.

Adjustable rate mortgages (ARM) held at an 8 percent share of mortgage applications for the fifth straight week.  The contract rate for the most widely offered ARM, the 5/1 hybrid, was 3.09 percent with 0.38 point.  The rate the previous week was 3.17 percent with 0.31 point.

MBA’s Weekly Mortgage Application Survey has been conducted since 1990.  It surveys mortgage bankers, commercial banks, and thrifts and covers over 75 percent of U.S. retail residential mortgage applications.  Base period and value for all indexes is March 16, 1990.  Interest rates are quoted for 80 percent loan-to-value ratio loans and points include the origination fee.


U.S. 30-Year Mortgage Rates Increase for a Second Week – Bloomberg

Mortgage rates for 30-year U.S. loans climbed for a second week, cutting into affordability as the housing recovery shows signs of cooling.

The average rate for a 30-year fixed mortgage was 4.33 percent this week, up from 4.28 percent, Freddie Mac said today. The average 15-year rate rose to 3.35 percent from 3.33 percent, the McLean, Virginia-based mortgage-finance company said.

While the job market is improving, higher prices and borrowing costs are making it more expensive to own a home. Monthly payments on a median-priced three-bedroom home — including mortgage, insurance, taxes and maintenance — rose an average of 21 percent in the fourth quarter from a year earlier, according to an analysis of 325 U.S. counties by RealtyTrac released today. Mortgage rates jumped to a two-year high in August from near-record lows in May, Freddie Mac data show.

“The cost of financed homeownership is becoming dangerously disconnected with still-stagnant median incomes,” Daren Blomquist, vice president at Irvine, California-based RealtyTrac, said in the report.

Starts for single-family houses slumped in January, in part because of unusually harsh weather in much of the U.S. Builders began work on 573,000 homes at an annualized rate last month, down 15.9 percent from December and the fewest since August 2012, Commerce Department data issued yesterday show.

Confidence among homebuilders dropped in February by the most on record as snowstorms on the East Coast limited prospective buyer traffic, according to the National Association of Home Builders/Wells Fargo sentiment gauge released this week.

To contact the reporter on this story: Prashant Gopal in Boston at pgopal2@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net

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