Mortgage Purchases Move Higher on Lower Rates

By Mike Colpitts

Applications for home mortgages increased slightly for the week, indicating that home buying activity is increasing in the New Year, according to the Mortgage Bankers Association. The bankers composite index, which includes both applications for home mortgages and refinances showed a 2.2% rise for the week.

However, on an unadjusted basis, when the index isn’t adjusted for the New Year’s holiday it was 47.5% higher compared to the previous week. The refinancing share accounted for 4.9% of the rise from a week ago.

Family Home

Near record low mortgage rates offered by lenders combined with lower prices on homes and condos are contributing to a rise in home buying activity, despite cold winter weather in most regions of the country.

The average interest rate for a 30-year fixed rate loan also declined for the week to 4.78% from 4.82% on mortgages that were contracted to close with .91 point. It’s the second week in a row that rates have declined after rising since late last October when rates hit their record all-time low.

The average contract rate on a fixed 15-year rate mortgage also declined to 4.15% from 4.23% on an 80% loan-to-value mortgage.

Refinances, however, also increased for the period to compose 72.1% of mortgage applications from 71% the prior week, indicating that more homeowners are applying to refinance their homes after the holidays with the lower rates.

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