Master of Business Administration

Mortgage Apps Rise as FHA Loan Demand Surges, Thetruthaboutmortgage.com

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Mortgage application volume increased 5.3 percent on a seasonally adjusted basis during the week ending April 15 as government mortgage demand surged, the Mortgage Bankers Association reported today.

The refinance index increased a meager 2.7 percent from the previous week, but purchase money mortgages jumped 10.0 percent, mostly due to a 17.6 percent spike in FHA loan lending.

“Purchase application volume jumped last week largely due to another sharp increase in applications for government loans. Borrowers were likely motivated to apply for loans before the scheduled increase in FHA insurance premiums,” said Michael Fratantoni, MBA’s Vice President of Research and Economics, in a release.

“Refinance activity increased somewhat, as rates dropped to their lowest level in a month towards the end of the week.”

That pushed the refinance share of mortgage activity to 58.5 percent of total applications from 60.3 percent a week earlier.

So it looks as if purchases will eclipse refinances in the near future, which is good news for the flagging housing market.

Meanwhile, the popular 30-year fixed-rate mortgage dipped to 4.83 percent from 4.98 percent, keeping the hope of refinancing alive for more borrowers.

The 15-year fixed averaged 4.07 percent, down from 4.17 percent a week earlier, meaning mortgage rates are still very, very low historically.

That alone could bring more buyers to the signing table this summer.

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What Up With That?, by Lee Adler, Wallstreetexaminer.com

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Logo of the Federal Housing Administration.

Image via Wikipedia

So there was this big jump in mortgage purchase applications today. I thought to myself, “Hmmmm, I  wonder how many will make it to closing. And I wonder what triggered the pop.” Pop is relative of course. Yeah, it was a 9% jump from last week, but the level is still 35% below last year in the same week and 62% below the May 2005 peak (I sold my house in Florida in April 05, closed in June, thank you very much Mr. Greenspan).

So I dug a little deeper, held my nose, read the press release straight from the MB Ass. And there it was.

“The increase in purchase activity was led by a 17.2 percent increase in FHA applications, while conventional purchase applications also increased by 3.6 percent,” said Jay Brinkmann, MBA’s Chief Economist. “This is the second straight weekly increase in purchase applications and the highest Purchase Index level since the expiration of the homebuyer tax credit program. One possible driver of last week’s big increase in FHA applications was a desire by borrowers to get applications in before new FHA requirements took effect October 4th, which included somewhat higher credit score and down payment requirements.”

The old “BUY NOW before we make it impossible for you” trick.

So much for that pop.

I’ll be updating the chart and commentary in the Professional Edition Housing Report tomorrow. You can stay up to date with regular updates of the US housing market, along with the machinations of the Fed, Treasury, and foreign central banks in the US market in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Try it risk free for 30 days. Don’t miss another day. Get the research and analysis you need to understand these critical forces. Be prepared. Stay ahead of the herd

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Home Purchase Loan Applications Highest Since May, thetruthaboutmortgage.com

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It was a good week for home purchase applications as refinance apps fell for a fifth straight week, according to the Mortgage Bankers Association.

Overall, mortgage application volume decreased 0.2 percent on a seasonally adjusted basis for the week ending October 1.

The refinance index slipped 2.5 percent from the previous week and the seasonally adjusted purchase index jumped 9.3 percent to the highest level since the week ending May 7.

The unadjusted purchase index was up 9.1 percent compared with the previous week, but still 34.7 percent lower than the same week a year ago.

“The increase in purchase activity was led by a 17.2 percent increase in FHA applications, while conventional purchase applications also increased by 3.6 percent,” said Jay Brinkmann, MBA’s Chief Economist, in a release.

“This is the second straight weekly increase in purchase applications and the highest Purchase Index level since the expiration of the homebuyer tax credit program.

Brinkmann noted that FHA loan apps may have jumped as borrowers rushed to get applications in before the new FHA requirements took effect on October 4th, which include higher credit score and down payment requirements.

The increase in purchase activity pushed the refinance share of mortgage activity to 78.9 percent of total applications from 80.7 percent the previous week.

Mortgage Rates Hit New Record Lows

Meanwhile, the popular 30-year fixed-rate mortgage hit a new record low 4.25 percent, down from 4.38 percent a week earlier.

The 15-year fixed also hit a record low, falling to 3.73 percent from 3.77 percent.

Finally, the one-year adjustable-rate mortgage increased to 7.11 percent from 7.04 percent.

The mortgage rates are good for mortgages at 80 percent loan-to-value – pricing adjustmentscan lower or raise your actual interest rate.

Keep in mind the MBA’s weekly survey covers more than half of all retail, residential loan applications, but does not factor out duplicate or rejected apps, which have surely increased since the mortgage crisis got underway a few years back.