Mortgage Applications Bounce Back After Dip

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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.

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The Moxley Team   | December 13, 2006

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