Tags: mortgage applications | home loan demand | housing | buyers

Mortgage Applications Rise 6.2 Percent as Interest Rates Climb

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Wednesday, 18 Nov 2015 09:09 AM

Mortgage application volume increased 6.2 percent last week from a week earlier, according to a survey by the Mortgage Bankers Association. The seasonally adjusted reading includes an adjustment for the Veterans Day holiday.

Applications to refinance loans increased 2 percent from the previous week, seasonally adjusted, and applications to purchase a home jumped 12 percent. Purchase applications are now 19 percent higher than a year ago, as mortgage-dependent, owner-occupant buyers replace cash-heavy investors, CNBC reported.

"This was despite the fact that mortgage rates reached their highest level since July," said Michael Fratantoni, the association's chief economist.

The average loan size for purchase applications rose to a survey high of $301,200.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.18 percent, its highest level since July 2015, from 4.12 percent.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.40 percent, its highest level since July 2015, from 3.35 percent.

Lenders have had to make major changes to their loan processing systems, and the fear was that this would slow applications; borrowers, therefore, rushed to get applications in before the rules went into effect on October 3, CNBC reported.

The TRID change is part of a move by federal regulators to further protect borrowers by forcing lenders to disclose all details of a loan at least three days prior to closing, CNBC explained. The program aims to consolidate rules and disclosures in the Truth In Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA), Investors.com explained.

The survey covers over 75% of U.S. retail residential mortgage applications, according to MBA.

But while it might make things easier for homebuyers, TRID will likely complicate things for mortgage lenders as well as Realtors, both of whom have been scrambling to learn new rules and adapt to a new system that covers everything from how closing fees can be imposed to when closing documents must be finalized, Investors.com said.

Stringent mortgage rules stemming from Dodd-Frank legislation have created a regulatory minefield for banks and loan brokers, Bloomberg reported.

This year alone, the Consumer Financial Protection Bureau has handed out more than $260 million in fines for residential-mortgage rule violations. Automated processing of home loans, such as the services offered by Black Knight, gives lenders protection by vetting every action for compliance.

Lending rules that rarely changed before the housing crisis are now in constant flux, said Richard Green, sales manager in the mortgage division of Presidential Bank, in Bethesda, Maryland.

“People outside of the industry think last year’s regulations on qualified mortgages were a sea change for the industry, but they weren’t,” Green said. “TRID is bigger because it’s not just about who gets mortgages, it’s about how the mortgages are made and how lenders do business.”

(Newsmax wire services contributed to this report).

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Applications for US home mortgages rose last week, data released on Wednesday showed.
mortgage applications, home loan demand, housing, buyers
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2015-09-18
Wednesday, 18 Nov 2015 09:09 AM
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