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

Mortgage Applications Drop 3.2 Percent as Rates Slip

Image: Mortgage Applications Drop 3.2 Percent as Rates Slip
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By    |   Wednesday, 25 Nov 2015 11:37 AM

Mortgage application volume fell 3.2 percent last week from the previous week on a seasonally adjusted basis, according to a survey by the Mortgage Bankers Association.

A definitive rise in mortgage interest rates over the last month is keeping borrowers at bay, CNBC reported,as volume is now skewing toward larger loans for more expensive homes.

The refinance share of mortgage activity increased to 58.7 percent of total applications from 58.6 percent the previous week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.14 percent from 4.18 percent,

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.39 percent from 3.40 percent, with points decreasing to 0.43 from 0.45 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

"The 30-year fixed rate has increased almost 20 basis points since a recent low, and the refinance index has decreased in four of the last five weeks," said Michael Fratantoni, the association's chief economist, CNBC reported.

"Average purchase loan size climbed to a new survey high last week, as the higher end of the market continues to grow more quickly than the entry level," Fratantoni said.

"Higher home prices are preventing some entry-level buyers from making a strong showing in the fall market. Tight supply of homes for sale pushed the S&P/Case Shiller national home price index up by 4.9 percent in September compared with a year ago. That is a wider annual gain than was measured in August," CNBC reported.

"While this will make news, it is not likely to push mortgage rates far above the recent level of 4 percent on 30-year conventional loans. In the last year, mortgage rates have moved in a narrow range as home prices have risen; it will take much more from the Fed to slow home price gains," said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, CNBC reported.

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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Loan application volume fell 3.2 percent last week from the previous week on a seasonally adjusted basis, according to the Mortgage Bankers Association. Volume is now skewing toward larger loans for more expensive homes.
mortgage applications, home loan demand, housing, buyers
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2015-37-25
Wednesday, 25 Nov 2015 11:37 AM
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