Mortgage applications surge on refinance push, falling rates
The total number of mortgage applications being filed nationwide has taken many hits in the 2014 calendar year, but that trend has been reversing itself more recently as rates have fallen pretty much across the board. And, as rates continue to fall, it seems as though it's drawing more current owners back into the mortgage market in particular.
Altogether, the total number of home loan requests filed with lenders in the week ending Oct. 17 surged 11.6 percent on a seasonally adjusted basis, and that number also didn't account for the Columbus Day holiday, according to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association. Further, that increase came even as purchase requests fell 5 percent from the previous week, bringing it to a level down 9 percent from a year earlier.
Instead, there was a 23 percent surge in refinance applications specifically, which brought the volume to the highest level seen in nearly a year, the report said. Further, that brought the share of the mortgage market taken up by refinances to 65 percent, from the previous week's 59 percent, marking the highest number seen since last December. Meanwhile, adjustable mortgages took up 9.4 percent of the market, marking the largest number since June 2008.
"Continuing concerns about weak economic growth in Europe and a few U.S. economic indicators that came in below expectations caused a flight to quality into U.S. Treasuries last week, leading to sharp drops in interest rates," said Mike Fratantoni, MBA's chief economist. "Mortgage rates have fallen close to 30 basis points over the last four weeks. Refinance application volume reached the highest level since November 2013 as a result, and the average loan balance for refinance applications increased to $306,400, the highest level in the survey's history."
How did rates move?
In all, average rates for 30-year fixed mortgages (used mostly for purchases) fell to 4.1 percent from the previous week's 4.2 percent, the report said. Likewise, those for 15-year FRMs (traditionally utilized in refinances) fell to 3.28 percent from 3.41 percent. Both were the lowest levels seen since May 2013.
Mortgage brokers and lenders still may have to do more to encourage people to get into the market in the coming months. This may be especially important because of the ways in which experts anticipate rates will rise to as much as 5 percent by the middle of next year.
By: Equity National October 23, 2014 Closing