Applications for home mortgages and refinances are soaring higher, showing an increase in activity in home sales and refinancing as a result of near record low loan rates, according to the Mortgage Bankers Association. Low rates coupled with lower home prices are producing the rise in applications.
The volume of home re-sales, however, scheduled to be reported by the National Association of Realtors tomorrow, is expected to decline from levels achieved over previous months as a result of the expiration of the home buyers federal tax credit.
Mortgage loan volume rose 7.6% for the week ending July 16 th, while refinances increased 8.6% over the previous week, the highest in a month. The rise was driven by a 10.7% increase in conventional loans, which compose the majority of home mortgages. The seasonally adjusted purchase index increased 3.4% from a week ago, driven by an 8% rise in government loan applications.
“As rates on 30 year and 15 year fixed rate mortgages declined to the lowest levels recorded in the survey refinance activity increased last week,” said Michael Fratantoni, the Mortgage Bankers Association economist. “The refinance index is up almost 30% over the last four weeks, but is still below the peak seen last spring. Refinance borrowers, aiming for the lowest possible rate are getting conventional loans.”
The bankers’ four week moving average for seasonally adjusted loans is up 4.9%, while the average for refinancing gained 6.5%. The increase in refinances represented 79.4% of all mortgage applications. It was the highest percentage of refinance applications in more than a year, since April 2009.
The average interest rate for a 30 year fixed rate mortgage dropped to 4.59%, a tenth of a percent decline from the prior week. The rate represents the lowest mark ever reached in the bankers’ survey. The average on a 15 year home loan also dropped to 4.05% or seven-hundredths of a percent from 4.12%. The figure also represents the lowest mark in the bankers’ survey achieved since records have been tabulated.