Tags: Mortgage | Applications | Drop | Rates | Refinance

Mortgage Applications Only Rise 4 Percent Despite Big Drop in Rates

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By    |   Wednesday, 24 May 2017 02:41 PM

Mortgage applications increased 4.4 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.

The Market Composite Index, a measure of mortgage loan application volume, increased 4.4 percent on a seasonally adjusted basis from one week earlier, the MBA said.

The Refinance Index increased 11 percent from the previous week to its highest level since March 2017.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to its lowest level since November 2016, 4.17 percent, from 4.23 percent.

The average contract interest rate for 15-year fixed-rate mortgages decreased to its lowest level since November 2016, 3.45 percent, from 3.51 percent.

"Homeowners took advantage of the 6 basis-point drop in rates," Lynn Fisher, vice president of research at the MBA, told CNBC. "Jumbo rates fell even more, sending the average refinance loan size up 5 percent as borrowers with larger loans, who are typically more sensitive to rate changes, moved to refinance."

Homebuyers were not especially excited by the drop in interest rates. Mortgage applications to purchase a home fell 1 percent from one week earlier and are just 3 percent higher than the same week one year ago.

"Despite favorable rates and labor market trends, the purchase market is struggling to accelerate due to low inventories of homes for sale and rising home prices," Fisher said.

Meanwhile, home resales fell from a more than 10-year high in April, weighed down by a chronic shortage of houses on the market that is keeping prices elevated and sidelining prospective buyers, Reuters reported.

Despite the stumble, the housing market remains on solid ground as the labor market nears full employment, which is expected to spur faster wage growth.

"The biggest problem with the housing market is a dearth of inventory, which is keeping sales down and prices up," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

The National Association of Realtors said on Wednesday existing home sales declined 2.3 percent to a seasonally adjusted annual rate of 5.57 million units last month. Sales scaled a 5.70 million-unit pace in March, which was the highest level since February 2007.

Though the drop in sales was worse than economists' expectations for a 1.1 percent decrease, April's sales pace was the fourth highest over the past 12 months. Sales were up 1.6 percent from April 2016, also underscoring the housing market's underlying strength.

There were 1.93 million houses on the market last month. While that was a 7.2 percent increase from March, supply was down 9.0 percent from a year ago. Housing inventory has dropped for 23 straight months on a year-on-year basis.

As a result, the median house price jumped 6.0 percent from a year ago to $244,800 in April, the highest level since June 2016 and marking the 62nd straight month of year-on-year price gains.

The sustained house price appreciation was also corroborated by a separate report from the Federal Housing Finance Agency showing house prices rose 6.0 percent in the first quarter from the first three months of 2016.

(Newsmax wire services contributed to this report).

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Mortgage applications increased 4.4 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.
Mortgage, Applications, Drop, Rates, Refinance
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2017-41-24
Wednesday, 24 May 2017 02:41 PM
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