Foreclosure Moratorium Triggers Mortgage Application Drop

Demonstrating that the four mortgage lenders foreclosure moratoriums count, applications for home mortgages dropped 10.5% last week, according to the Mortgage Bankers Association. Applications for refinances dove 11.2%, while purchase money applications for new home mortgages were down 6.7%.

The expiration of the federal home buyer tax credit coupled with the foreclosure freeze put in place by Bank of America, JP Morgan Chase & Co., Ally Financial and PNC Financial were enough to turn home sales sluggish in many areas of the country.

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However, BofA and GMAC have removed moratoriums in 23 states where judicial rulings are required on foreclosures after reviewing paperwork, according to company officials. The move should act to re-stimulate home sales in many areas of the country.

The average contracted interest rate for a 30-year fixed rate mortgage increased to 4.34% from 4.21%, with points decreasing to 0.81 from 1.02, indicating that mortgage rates may be on their way up after bottoming last week. It’s the first rise in 30-year fixed contracted rates in six weeks. The 15-year fixed rate contracted mortgage also moved higher from 3.62% to 3.74% during the week with points dropping to 1.00 from 1.06. The jump also represents the first rise in a month and a half.

The four week moving average for residential mortgage applications, however, made a minor move up for the month, rising a slim 0.4%. Refinances remain as the wholly dominant portion of the mortgage financing market, compiling 82.4% of business. Refinances have remained as the anchor of the mortgage market since the beginning of the year as interest rates remain at or near record low levels.

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