Mortgage applications soar 11.3% on brief rate dip
2015-09-14Home mortgage applications increased dramatically last week, as a strong sell-off in the U.S. stock market pushed interest rates lower briefly.
Jumbo loan borrowers were especially enticed by the potential savings. An index of application volume jumped 11.3 percent on a seasonally adjusted basis for the week ending August 28th versus the previous week, according to the Mortgage Bankers Association (MBA). Volume is now up 30 percent from a year ago.
Refinance applications, which are most rate-sensitive, increased 17 percent from the previous week to the highest level since April, 2015. Loan applications to purchase a home, which have been less responsive to rates, rose 4 percent for the week and are now 25 percent higher than one year ago.
This as the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) remained unchanged at 4.08 percent, with points increasing to 0.37 from 0.36 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The rate had, however, moved an eighth of a percent lower for a few days before regaining ground, according to Mortgage News Daily.
"The average size of a refinance application increased to its highest level since January. Somewhat surprisingly, the ARM [Adjustable Rate Mortgage] share increased last week to its highest level since last October. This could be driven by the more sensitive response from jumbo borrowers, who tend to favor ARMs to a greater extent," noted Fratantoni.
Rising home values may also be reassuring more borrowers, making them feel safer about moving to adjustable-rate loans, which offer lower rates but with more risk. A rush to security following the housing crash has had the vast majority of borrowers choosing fixed rate loans.
Source: http://www.cnbc.com/2015/09/02/mortgage-applications-soar-113-on-brief-rate-dip.html
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