At FREEandCLEAR, we follow the Mortgage Bankers’ Association (MBA) mortgage applications index which measures both purchase and refinance applications for mortgage lenders across the country.  An increase in the MBA applications index reflects an increase in mortgage applications while a decrease in the index reflects a decline in mortgage applications.

For the week ending March 6th, the composite mortgage application index, which includes both home purchase mortgages and refinancings, declined 1.3% as compared to a 0.1% increase for the prior week.  The decrease in composite index was driven by a 3.0% decline in the refinance index which reversed a 1.0% gain for the prior week.  Purchase applications increased a modest 2.0% as compared to the 0.2% decline for the prior week.  Interest rates reversed course with the average interest rate for conforming loans (mortgage amount less than $417,000) increasing to 4.01% as compared to 3.96% for the prior week.  The latest mortgage applications index report reinforces that the mortgage and real estate markets continue to be stuck in neutral.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

As has been the case for the past six weeks, the mortgage application index report failed to generate much excitement in the real estate and mortgage markets.  The uptick in purchase application activity was a positive but neither the purchase or refinance mortgage markets can seem to generate any real momentum.  While the increase in interest rates is a negative for mortgage borrowers, the lack of application activity should make lenders hungrier for your mortgage business.  Although interest rates rose slightly on the week, they continue to be relatively low and now may be a good time to start the home buying process or refinance your mortgage.  If you are a prospective home buyer, use our Mortgage Selector Calculator  to determine what size mortgage you qualify for and the mortgage program that is right for you.  If you have a mortgage, use our Refinance Calculator to determine how much money you can save by refinancing your existing mortgage.  Although mortgage application activity is sluggish, now may be the time for you to make your mortgage move.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com

At FREEandCLEAR, we follow the Mortgage Bankers’ Association (MBA) mortgage applications index which measures both purchase and refinance applications for mortgage lenders across the country.  An increase in the MBA applications index reflects an increase in mortgage applications while a decrease in the index reflects a decline in mortgage applications.

The composite mortgage application index, which includes both home purchase mortgages and refinancings, barely broke a multi-week downward streak, increasing a modest 0.1% for the week ending February 27th.  The composite index was boosted by a slight uptick in refinancing applications, which increased 1.0% for the week as compared to an 8.0% decline for the prior week.  The purchase application index basically held steady, declining a minuscule 0.2% as compared to a 5.0% increase for the prior week.  Interest rates reversed their gradual upward climb with the average interest rate for conforming loans (mortgage amount less than $417,000) decreasing to 3.96% as compared to 3.99% for the prior week.  The latest mortgage application index report underscores the lackluster nature of the mortgage and real estate markers.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

After mortgage application activity declined over most of February, a flat report to end the month is relatively positive news.  The small decline in interest rates is also a positive development for potential mortgage borrowers after several weeks of small increases in mortgage rates.  The lack of both purchase and refinancing mortgage application activity means that lenders are aggressively pursuing new mortgage customers. Use this dynamic to your advantage if you are thinking about buying a home or refinancing.  Lenders should be more willing to compete for your business which means they may be more open to negotiating lower interest rates or fees.  If you are thinking about getting a mortgage FREEandCLEAR recommends that you gather proposals from at least four lenders to find the mortgage that is right for you.  Whether you are getting a mortgage to buy a home or refinancing, we provide a comprehensive discussion on How to Compare Mortgage Proposals and Select a Lender and use our INTEREST RATES function to review interest rates and fees for lenders in your area.  Mortgage borrowers can take advantage of the lull in application activity to find the mortgage with the lowest interest rate and costs.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com

The National Association of Realtors pending home sales index tracks the number of existing homes that went into contract to be sold.  When a home seller and buyer agree to the price and terms of a home sale, they sign a contract that outlines the transaction details and the property is said to be “under contract.”  The home sale process is typically completed four-to-six weeks after the property goes under contract so the pending homes sales index is a leading indicator, or predictor, for the real estate market.  An increase in the index reflects an increase in existing home sales while a decrease in the index reflects a decrease in existing home sales.  It is important to point out that the index tracks existing home sales as opposed to new home sales, or homes that are recently constructed that have not been lived in previously.  When people purchase a home they typically get a mortgage so the index also forecasts future activity in the mortgage market. The pending home sales index is released on a monthly basis and provides figures for the prior month.

In a positive sign for the real estate and mortgage markets, the pending home sales index report for February 2015 showed that pending home sales in January increased 1.7% on a month-over-month basis (as compared to December 2014).  The increase in the index compares to a 3.7% decrease in the index reported for December and fell within the range of  analyst expectations.  The increase in the pending home sales index was driven by gains in the two largest housing regions, the South and the West while the Northeast was flat and the Midwest declined slightly.  The February pending home sales index report is viewed as a mildly positive development in comparison to the mixed results from other housing and mortgage market reports such as the mortgage application index and new and existing home sales.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

The small uptick in the pending home sales report suggests that home purchase mortgage application activity should increase moderately over the next month as an increase in pending home sales typically translates into more mortgages for home buyers.  The relatively small increase in the index, however, underscores the lack of momentum in the housing and mortgage markets.  Many prospective home buyers have yet to take advantage of low interest rates while homeowners are staying in their homes longer which reduces the housing inventory available for sale and overall market activity.  Market participation by first-time home buyers remains low and will need to significantly increase for the housing market to gain any sustained momentum.  Many prospective first-time home buyers are overwhelmed by the mortgage process so we created our First-Time Home Buyer Mortgage Cheat Sheet to help them prepare for and better manage the process.  We will continue to monitor the pending home sales index along with all the important housing and mortgage market metrics so stayed tuned to the FREEandCLEAR Blog for the latest news, insights and updates.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com

There are two primary measures of housing prices that we track at FREEandCLEAR: the Federal Housing Finance Agency (FHFA) House Price Index, which uses certain nationwide mortgage activity to track home prices and the S&P / Case-Shiller Home Price Index, which tracks home prices in 20 U.S. metropolitan markets.  Both indices are reported on a monthly basis and include information for the month that is two months prior to the reporting date.

The FHFA House Price Index for February 2015 showed that December housing prices increased 0.8% as compared to November and increased 5.4% on a year-over-year basis (so as compared to December 2013).  The FHFA House Price Index for December came in at the high end of the range of analyst projections and built upon comparable results for November 2014 which showed a 0.7% increase on a monthly basis and a 5.2% increase on a year-over-year basis.  The S&P / Case-Shiller Home Price Index for January 2015 showed similar results with housing prices increasing 0.9% in December as compared to November and increasing 4.5% on a year-over-year basis, which represents a slight increase as compared to the 4.3% year-over-year growth reported in November.  The monthly increase in the index represented the largest increase in nine months.  The S&P / Case-Shiller Home Price Index figures came in at the top end of analyst expectations with both the monthly and annual figures increasing slightly as compared to November.  The positive performance for both the FHFA House Price and S&P / Case-Shiller Home Price indices to close out 2014 shows stability in housing values but contrasts with more recent data on housing prices in the February new and existing home sales reports, which both showed declines in median home sales prices in January.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

Home price appreciation is a positive for homeowners but a negative for home buyers looking to enter the market, although the February reports are not all negative for home buyers.  The strong showings from the FHFA Housing Price Index and S&P / Case-Shiller Home Price Index for the second consecutive month may cause more homeowners to consider selling which would bring more supply on the housing market for buyers. Additionally, housing market statistics continue to be mixed as more recent reports on home sale prices showed that prices softened in January as home sales declined.  Plus, interest rates continue to be relatively low which means buyers can afford larger mortgages and buy more house for their money.  A more significant increase in the indices would be cause for concern but FREEandCLEAR believes that now continues to be a favorable time to consider buying a home.  Use the FREEandCLEAR Mortgage Qualification Calculator to determine what size mortgage you can afford and review our Mortgage Process Guide to master the mortgage process from start to finish.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com

At FREEandCLEAR, we follow the Mortgage Bankers’ Association (MBA) mortgage applications index which measures both purchase and refinance applications for mortgage lenders across the country. An increase in the MBA applications index reflects an increase in mortgage applications while a decrease in the index reflects a decline in mortgage applications.

Although composite mortgage application activity continues to decline in February, for the week ending February 20th, the purchase mortgage application index snapped a six week losing streak, increasing 5.0% as compared to the prior week. The composite mortgage application index, which includes both home purchase mortgages and refinancings, continued its downward slide, declining 3.5% on the week as compared to a 13.2% decline for the prior week and a 9.0% decline for the week before that. Refinancing applications continue to drag down the composite index, dropping 8.0% on the week following a 16.2% drop in the prior week and a 10.0% drop in the week before that. Interest rates continued to edge up with the average interest rate for conforming loans (mortgage amount less than $417,000) increasing to 3.99% as compared to 3.93% for the prior week. The gradual increase in interest rates is putting a damper on refinance activity while purchase mortgage application activity is showing some signs of life after a month and a half lull. (Source: Bloomberg)

What it Means for Mortgage Borrowers
Overall mortgage application activity continues to decline during February but the positive performance for the purchase application index is a bright spot. Homeowners with existing mortgages should use our Refinance Calculator to determine if they can save money by refinancing despite the moderate increase in interest rates. Now continues to be a favorable time for home buyers as interest rates remain relatively attractive, despite their increase, and home prices remain stable as indicated by the existing and new home sales reports for February. Check out our Mortgage Selector Calculator to determine what size mortgage you can afford and the mortgage program that is right for you. As always, use the INTEREST RATES function on FREEandCLEAR to keep track of mortgage rates for lenders in your area.

The FREEandCLEAR Mortgage Expert
www.freeandclear.com

In our effort to cover important trends that affect the mortgage market, FREEandCLEAR keeps a close eye on new home sales, which is the number of newly constructed housing units that are sold in a month.  The new home sales figure is reported separately from the existing home sales figure, which is the number of previously constructed homes that are sold in a month.  The new home sales market is smaller than the existing home sales market but it is still an important indicator for the real estate and mortgage markets.  In addition to reporting the number of housing units sold, the new home sales report also includes information on the supply of units for sale as wells as the median and average new home sales price.

The new home sales report, issued on a monthly basis, includes statistics for the prior month.  Coming off a strong January report that showed new home sales spiked 8.1% to an annualized 482,000 units in December 2014, the February new home sales report showed continued momentum with new home sales coming in at an annualized 481,000 units in January 2015.  The January new home sales figure exceeded expectations as analysts were anticipating a drop-off as compared to the robust December figure.  The January median new home sales price decreased 2.6% to $294,000 as compared to $298,000 in December.  The number of new homes available for sale, known as supply, remained relatively flat at 218,000 units.  Supply as compared to monthly sales declined slightly to 5.4 months in January as compared to 5.5 months in December.  The sustained activity in the new home sales market and the relatively low supply figures are welcome developments for both home buyers and builders.  The strong February new home sales report contrasts with the disappointing existing home sales report which showed an unexpected drop in sales.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

The housing market is off to a mixed start in 2015 with strong new home sales and weak existing home sales.  Because the existing home sales market is significantly larger than the new home sales market, the overall trend for the housing market is sluggish.   From a home buyer and mortgage borrower’s standpoint, both reports showed a decline in the median home sales price which is a positive for prospective home buyers.  Additionally, interest rates remain relatively low which helps borrowers afford larger mortgages and buy more house for their money.  Check out our Mortgage Qualification Calculator to determine what size mortgage you can afford at today’s mortgage rates and use the INTEREST RATES feature on FREEandCLEAR to compare rates and fees for lenders in your area.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com

In her semi-annual testimony to the Senate Banking Committee, Federal Reserve Chair Janet Yellen expressed uncertainty about the labor and housing markets and indicated that any increase in interest rates would be indicated well in advance of a rate change.  Based on Ms. Yellen’s statement, industry analysts predicted that the earliest that the Federal Reserve would increase interest rates would be June.  It is important to note that although the interest rate policy implemented by the Federal Reserve is one of the most important factors that determines mortgage rates, it is not the only factor.  Mortgage rates are influenced by multiple factors including broader housing, economic and geopolitical conditions.

What it Means for Mortgage Borrowers

The Federal Reserve Chair’s testimony did not have a significant impact on current mortgage rates.  Most industry analysts had predicted that June would be the earliest that the Federal Reserve would possibly raise interest rates so Ms. Yellen’s testimony did not come as a surprise to the market.  Although mortgage rates have crept up over the past several weeks, they remain relatively low and now continues to be a good time to buy a home or refinance.  Ms.  Yellen’s testimony did signal that the Federal Reserve is inclined to raise interest rates some time this year, potentially as early as June, which means that mortgage rates are likely to increase over the course of 2015.  It is impossible to predict interest rates and the Federal Reserve remains concerned about the relatively unsteady labor and housing markets but it would not surprise the FREEandCLEAR Mortgage Expert to see interest rates increase over the second half of 2015.  Now may be a good time to pull the trigger if you are thinking about buying a home or refinancing and use the INTEREST RATES feature on FREEandCLEAR to monitor mortgage rates for lenders in your area.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com

According to a recent report from the U.S. Census Bureau, the rate of homeownership hit a 20 year low of 64.5%  in 2014.  The Census Bureau defines the homeownership rate as the percentage of households that own the house in which they live.  The home ownership rate peaked at 69.0% in 2004 and has been declining over the past ten years.  1994 was the last year that the home ownership rate was as low as 64.5% meaning that 2014 officially erases two decades of home ownership growth in the U.S.

There are many factors that have contributed to the decline in home ownership in the U.S. such as the housing market collapse, economic recession, employment uncertainty and tighter lending standards including higher down payment requirements.  Additionally, FREEandCLEAR believes that the increased complexity of the home buying and mortgage processes has made getting a mortgage and purchasing a home more difficult for more people.  Many people believe that buying a home is out of reach and lack the tools and resources to successfully manage the mortgage process.  The rate of home purchasers that are first time home buyers also continues to decline, a sign that more people are deciding to rent longer instead of buying.

The decline in the home ownership rate and housing market participation by first-time home buyers is one of the reasons we developed FREEandCLEAR.  Our goal is to empower people with high-quality, easy-to-use tools and resources that enable them to understand and better manage a mortgage process that can be overwhelming and confusing.  With the right knowledge, informed borrowers can make better decisions and save money when they get a mortgage.  FREEandCLEAR offers a detailed first-time home buyer cheat sheet, mortgage process guide and mortgage topic instructional videos to guide people through the mortgage process step-by-step.  Although getting a mortgage and buying a home remains a challenging process, borrowers can use FREEandCLEAR to take control of the mortgage process and buy their dream homes.

FREEandCLEAR Mortgage Expert

www.freeandclear.com