Loan Demand Up After 10 Weeks of Decreases
DAILY REAL ESTATE NEWS | WEDNESDAY, DECEMBER 21, 2016
Rising rates didn’t deter home buyers or owners last week. Mortgage applications – for both refinance and home purchase purposes – grew 2.5 percent on a seasonally adjusted basis last week, the Mortgage Bankers Association reported Wednesday.
Despite the uptick, application volume remains nearly 11 percent lower than the same week one year ago. Still, following 10 weeks of declines in loan demand, the increase in applications in the latest week was a hopeful sign to lenders that consumers may be adjusting to the new reality of rising rates. The average 30-year fixed-rate mortgage was 4.41 percent last week, its highest average since May 2014, MBA reported.
"Mortgage rates increased at least partially as a result of the Federal Reserve's rate hike and move to a slightly more hawkish stance," says Mike Fratantoni, MBA's chief economist. "Borrowers may have gotten applications into their lender in advance of the FOMC announcement, as most observers anticipated an increase in the Fed's rate target at the December meeting."
Broken out, refinancing applications last week gained 3 percent week-to-week. Applications for home purchases also saw a 3 percent increase last week. Purchase application volume was just 1 percent higher than the same week a year ago.
"Purchase activity remains skewed toward the higher end, with the average purchase loan size at its second highest level in the history of the survey," Fratantoni says.
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The average loan size was $312,000, which is higher than the median sales price of an existing home. Further, adjustable-rate mortgage applications rose to 6.5 percent of total mortgage applications, the highest level since February, MBA reported.
Source: “Borrowers Brush Off Rising Rates, Pushing Mortgage Applications 2.5% Higher,” CNBC (Dec. 21, 2016)