Doug Duncan, chief economist for the Mortgage Bankers Association, expects the 30-year mortgage rate to hover around 6.5 percent for the remainder of the year, but climb to 6.8 percent by the end of 2008.

Duncan is “optimistic about a rebound” in the housing market next year, citing still-low long-term interest rates, robust capital expenditures, and rising equity prices, among other factors.

Meanwhile, the NATIONAL ASSOCIATION OF REALTORS® expects existing-home sales to slip to just above 6.4 million in 2007 from an estimated 6.47 million this year. But a pullback in construction will spark an 8.7-percent decline in new-home sales to 975,000 from 1.07 million over the same time span.
 

Applications for mortgages were at their highest level last week in more than a year, according to the Mortgage Bankers Association.

The seasonally adjusted index of total mortgage applications rose 11.4 percent in the week ending Dec. 8 to 721.2, the highest level since October 2005. On an unadjusted basis, the index increased 10.2 percent compared with the previous week and was up 22.2 percent compared with the same week one year earlier.

“The substantial decline in mortgage rates over the last six months, greater than 80 basis points in total, has led to a significant increase in refinance activity. Additionally, we are seeing a steady increase in purchase applications,” said Mike Fratantoni, senior economist at the MBA, in a statement.

The refinance share of mortgage activity increased to 52.6 percent of total applications from 50.1 the previous week. The refinance share is at its highest level since April 2004.

The average interest rate for 30-year fixed-rate mortgages increased to 6.02 from 5.98 percent. The average interest rate for a 15-year fixed-rate mortgage increased to 5.75 percent from 5.66 percent. The average interest rate for one-year ARMS decreased to 5.76 percent from 5.79 percent.

What this means in months to come and 2007 is that buyers are now seeing that interest rates are good and are jumoing in to secure a loan for their future purchase which will start the first quarter of ‘07 off with a good start. The more applications we see get approved the more homes will be purchased driving down supply and increasing demand for homes.

There are reasons to be optimistic about real estate next year, a BusinessWeek Online analyst says.

New and existing home sales might slide further in 2007, but there won’t be a sharp decline like there was in the early ‘80s and ‘90s. Why? Because the overall economy is in good shape.

Some markets will become much more affordable, making a home purchase possible for people who never could have afforded one previously.

Speculators who drove up housing prices will move on to speculate on something else.

Fewer new homes will be built, and surplus inventory will be absorbed, so prices will stabilize.

Mortgage rates will remain at relatively low prices and could go even lower if the Federal Funds Rate falls, which it might.

The East Dublin condo market is seeing a bit of a jump compared to previous months. With the number of sold homes close to the all time high and the number of available homes at level of early ‘06, this market is starting to realize its potential. Check back for more information on East Dublin and the driving force behind this market.

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November saw close to the same numbers as October regarding available homes on the market with the number of sold homes slightly off from the previous month. November of 2005 saw 57 sold homes with 64 available at the end of the month. We are not yet in the clear when it comes to numbers of a year or two ago, but many feel 2007 will be a good year with 2008 doing very well. Look for our future postings where we will be covering forecasts for 2007 and 2008.

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The housing correction is about two-thirds finished, but the market will hit a trough in the first half of 2007, predicts Freddie Mac Chief Economist Frank Nothaft, speaking at the 10^th annual Home Building Conference, sponsored by the New York Society of Security Analysts.

“We’re most of the way there,” he says. “We’ve still got a bit of decline going forward. I do think by the second half of 2007 we will see home sales and activity picking up, not back to 2004 and 2005 levels, but above the trough.”

Nothaft predicts average home prices across the United States will appreciate by 3 percent in 2007.

The 30-year fixed rate mortgage is now at the lowest level since Jan. 26 of this year at 6.14% from 6.18 a week ago according to Freddie Mac. 

The 15-year, fixed-rate mortgage is now at the lowest level since Feb. 2, 2006 at 5.87 percent, down from 5.91 percent last week but up slightly from 5.81 percent a year ago.

“Mortgage rates drifted lower this week, bringing long-term rates to levels below those of this time last year,” says Frank Nothaft, Freddie Mac vice president and chief economist. “Mortgage applications for home purchases in November have remained healthy, largely because of the drop in mortgage rates and a softening in home prices in some areas.”