Data from an industry group showed on Wednesday that last week U.S. mortgage applications jumped to their highest since late May as interest rates tumbled below 5 percent.
Mortgage Bankers Association seasonally adjusted index of mortgage applications
It has been stated by the Mortgage Bankers Association that its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended Sept 18 has shown a rise up to 12.8 % to 668.5, which is the highest level since the week ended on May 22.
Home refinancing loans
While consumers demanded for home refinancing loans, their desire for applications to buy a home, which is considered to be a tentative early indicator of sales, was also robust. The overall trend bodes well for the hard-hit U.S. housing market, the market that has been showing signs of stabilization.
It has been said by Eric Belsky, executive director at Harvard University’s Joint Center for Housing Studies, that several months of improvement in new and existing home sales is a positive sign.
30-year fixed-rate mortgages borrowing costs
On 30-year fixed-rate mortgages borrowing costs excluding fees, averaged 4.97 percent, which has decreased .11 percentage point from the previous week. It was the first time that the rate on this most widely used home loan was below 5 percent since the week ended May 22.
However, the rate still remained above the all-time low of 4.61 % that has been set in the week ended March 27. Since 1990 the survey has been conducted weekly. Nevertheless, interest rates were well below year-ago levels of 6.08 %.
Refinancing Jumps
The Mortgage Bankers seasonally adjusted index of refinancing applications has raised 17.4% to 2,881.5, with the index at its highest since the week ended May 29.
Increase in Refinancing Applications
The refinance share of applications increased from 61.0 percent the previous week to 63.8 % , but it has remained significantly lower than the peak of 85.3% in the week to January 9. There has been an increase in adjustable-rate mortgage share of activity to 6.7 percent, which has raised up from 6.0 percent the prior week.
Great depression affects housing Market
Since the Great Depression of the 1930s the U.S. housing market has suffered the worst downturn and its impact has rippled through the recession-hit economy, as well as the rest of the world.
Housing market is stabilizing
However with sales rising and home price declines moderating in many regions of the country the housing market, has been showing signs of stabilization. In fact, there has been a rise in home prices in some areas.
Fixed 15-year mortgage rates
Fixed 15-year mortgage rates averaged 4.41 percent, that has not changed from the previous week. Rates on one-year ARMs lower down from 6.61% to 6.52 %.