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Mortgage Applications Surge 8.3 Percent on Pent-up Holiday Demand

Mortgage Applications Surge 8.3 Percent on Pent-up Holiday Demand
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By    |   Wednesday, 10 January 2018 02:46 PM

Pent-up demand from the holidays reportedly most likely fueled the solid jump in mortgage applications last week.

Total application volume rose 8.3 percent during the first week of the year from the previous week, as mortgage rates held below year-ago levels, according to the seasonally adjusted Mortgage Bankers Association report.

Refinance applications led the charge, rising 11 percent from the previous week. Homeowners may be taking advantage of lower rates now, concerned that rates will move higher this year, CNBC reported.

“Rates were higher at the start of 2017 than they are now. Homeowners also saw big gains in home equity last year and may be taking advantage of that in cash-out refinances,” CNBC explained.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $453,100 or less was basically unchanged during the week, increasing just 1 basis point to 4.23 percent.

Homebuyers also came back to the market after the holiday break. Mortgage applications to purchase a home rose 5 percent for the week but were 1 percent lower than the same week one year ago.

"This was likely a catch-up week for potential borrowers as we head into the new year," said Joel Kan, an MBA economist.

In the latest read of the real-estate market's pulse, contracts to buy previously owned homes edged higher in November, boosted by job growth across a strengthening economy.

The National Association of Realtors recently said its pending home sales index rose to a reading of 109.5, up 0.2 percent from October.

Economists polled by Reuters had forecast pending home sales falling 0.4 percent last month.

Pending home contracts are seen as a forward-looking indicator of the health of the housing market because they become sales one to two months later.

The housing sector has regained some momentum recently after treading water for much of the year because of a lack of inventory which has driven up prices, and both labor and land shortages.

The U.S. economy grew at its fastest pace in more than two years in the third quarter, powered by robust business spending, while the jobless rate in November held at a 17-year low of 4.1 percent.

Meanwhile,  President Donald Trump's U.S. tax overhaul probably will make housing less affordable, according to nearly half of the property market experts polled by Reuters, with another third saying it would not do anything to improve it.

A decade on from the start of the crash that knocked more than a third off U.S. home values and led to a deep global recession, the housing market has bounced back smartly.

U.S. house prices are expected to rise next year and in 2019, faster than predicted just a few months ago and at more than double the rate of underlying consumer inflation and wages. That is in sharp contrast to the outlook for Britain. 

The S&P/Case Shiller composite index of U.S. home prices in 20 metropolitan areas is expected to gain 5.1 percent next year and 4.2 percent in 2019.

The main challenge currently is a chronic shortage of homes, which is pushing prices beyond the reach of new buyers, who tend to be young and not particularly well-paid and, if university-educated, already saddled with huge amounts of debt.

Now adding to those concerns is an effort by President Donald Trump’s administration to overhaul the tax code, which analysts say could undermine any potential improvements in affordability in the housing market.

(Newsmax wire services contributed to this report).

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Total application volume rose 8.3 percent during the first week of the year from the previous week, as mortgage rates held below year-ago levels, according to the seasonally adjusted Mortgage Bankers Association report.
mortgage, applications, home, loan, demand, housing
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2018-46-10
Wednesday, 10 January 2018 02:46 PM
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