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.

Purchase mortgage applications cooled off for the second week in a row as higher interest rates may be slowing mortgage activity.  For the week ended May 15th, the purchase applications index declined 4.0% after dropping a modest 0.3% for the prior week.  After increasing for much of March and April, purchase applications have hit a roadblock in May, partially due to the gradual rise in mortgage rates.   The refinance applications index inched up 0.3% on the week after declining 6.0% and 8.0% in the prior two weeks.  Helped by the gain in refinance applications, the composite applications index, which includes both purchase mortgages and refinancings, decreased 1.5% on the week after declining 3.5% for the prior week.  Interest rates reached their highest level of 2015, putting a damper on the mortgage market.  The average interest rate for conforming loans (mortgage amount less than $417,000) increased to 4.04% as compared to 3.85% three weeks ago.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

With the Spring home buying season in full swing, higher interest rates have created some headwinds for the mortgage market over the past two weeks.  The positive news in the latest mortgage applications index report is that refinance applications stabilized after several weeks of significant declines.  The boost in refinance applications shows that mortgage lenders remain open for business and are looking to lend to qualified borrowers.  Although interest rates have risen over the past three weeks, they remain relatively low and prospective home buyers may be surprised to see how far their monthly mortgage payment can take them.  Prospective buyers can use our Mortgage Qualification Calculator to determine what size mortgage you can afford.  Current homeowners can use our Mortgage Refinance Calculator to determine how much money you can save by refinancing your existing mortgages.  Whether you are looking to buy a home or refinance, check out our INTEREST RATES feature to compare lenders in your area to find the mortgage with the lowest rate and fees.

The FREEandCLEAR Mortgage Expert

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A key report that reflects the strength of the housing market is the monthly Housing Starts report released jointly by the U.S. Census Bureau, U.S. Department of Commerce and U.S. Department of Housing & Urban Development.  The Housing Starts report includes two pieces of data: starts and permits.  A housing start is counted when construction begins on a new single or multifamily property.  A permit is counted when a permit is issued by a local government to a property owner or builder to begin construction on a new single or multifamily property. Because construction typically begins soon after a new permit is issued, housing starts and permits are typically highly correlated.

After a long and relatively lackluster winter, housing starts shot up like a rocket to start Spring. The Housing Starts report issued in May 2015 showed the strongest results in almost eight years.  Housing starts jumped 20.2% to 1.135 million annualized units in April after increasing a meager 2.0% in March.  The housing starts figure exceeded expectations by approximately 15,000 units.  The jump in housing starts was driven by all property types, with single-family residence starts up 16.7% and multi-family residences up a whopping 27.2%.

Housing permits also shot up, increasing 10.1% in April to 1.143 million annualized units, as compared to a 5.7% decline in March.  The permit figure surpassed analyst expectations by approximately 23,000 units.  Up 20.5%, the growth in multi-family permits significantly outpaced single-family permits, which increased 3.7%.  The report showed strength across all geographies, led by the West and the Northeast. (Source: Bloomberg)

What it Means for Mortgage Borrowers

The robust Housing Starts report is welcome news for the real estate and mortgage markets.  After several months of sluggish results due to weather-related challenges, the May Housing Starts report shows that the housing market is roaring back to start Spring.  An increase in starts and permits is welcome news for potential home buyers as it means that builders will be bringing more housing supply onto the market as starts turn into homes for sale in the coming months.  It is important to note that many multi-family units will be made available for rent instead of for sale but the tremendous overall increase in starts and permits shows that home builders believe there is growing demand for new housing.  With more supply coming onto the market over the next couple of months, as indicated by the housing starts report, now is a good time to start the mortgage process.  If you are a first-time buyer, use our First-Time Home Buyer Mortgage Cheat Sheet to learn about the key steps in the mortgage process.  You can also use our Mortgage Selector Calculator to determine the what size mortgage you can afford and the mortgage program that is right for you. And use our INTEREST RATES function to compare rates and fees for lenders in your area to find the mortgage that is right for you.

The FREEandCLEAR Mortgage Expert

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The National Association of Home Builders Housing Market Index is one of the key housing market statistics that we track at FREEandCLEAR.  The Housing Market Index incorporates factors such as current and expected new home sales and interest level from potential new home buyers.  It is important to highlight that the index focuses on new home sales, so homes built by builders that have never been lived in before, as opposed to existing home sales, which represents a larger portion of the overall housing market.

The housing market index remains in positive territory although weakness in the first-time home buyer segment resulted in a monthly decline.  For May 2015, the Housing Market Index came in at 54 as compared to 56 in April 2015.  Any figure above 50 is considered positive and May represents the 11th consecutive month with the index above 50.  The May figure came in below industry analyst expectations as the present sales and traffic components of the index dipped as compared to April.  The present home sales component of the index dropped from 61 from 59.  Home buyer traffic continues to be the weakest component of the index, dropping from in 41 in April to 39 in May.  Any index component below 50 is considered to be weak and the lack of market participation by first-time home buyers continues to negatively impact traffic.  On a positive note, the future home sales component of the index increased to 64 from 63, showing continued home builder optimism for a strong Spring home buying season. (Source: Bloomberg)

What it Means for Mortgage Borrowers

Although the May housing market index declined, it reflects the overall strength of the new home market.  The relatively strong figures for the present sales and future home sales components of the index are positive indicators for the real estate and mortgage markets.  Weakness from the first-time home buyer segment is not a new theme as home ownership by first-time buyers recently hit a multi-decade low.  Although the new home market is smaller than the existing home market, May’s positive housing market index report suggests that home builders will continue to bring more supply onto the market, which is good news for prospective buyers.  If you are in the market for a new home, use our Mortgage Qualification Calculator to determine what size mortgage you can afford and review our Mortgage Expert Insight on the Differences Between Buying a New Home and an Existing Home.

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 slow climb in interest rates over the past month put a damper on the mortgage applications index for the week ended May 8th.  The composite applications index, which includes both purchase mortgages and refinancings, decreased 3.5% on the week after declining 4.6% for the prior week.  The purchase applications index declined a modest 0.2% after gaining 1.0% for the prior week.  The drop in purchase applications represents only the second time in the past seven weeks that the index has declined.  The refinance applications index decreased 6.0%, a slight improvement as compared to the 8.0% decline for the prior week.  Although interest rates remain low on a historical basis, the gradual increase in rates appears to be slowing the mortgage market.  The average interest rate for conforming loans (mortgage amount less than $417,000) increased to 4.00% as compared to 3.85% just two weeks ago.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

The latest applications index report is a setback for the mortgage and real estate markets which had been showing building momentum over the past six weeks.  Although interest rates are still relatively attractive, the increase in rates is likely one of the contributors to a slowdown in purchase mortgage applications on the week.  Refinance activity appears to be more sensitive to interest rates, having experienced a more significant decline than purchase applications over the past several weeks.  The Spring home buying season had started off strongly and we will watch future mortgage application index reports to determine if this week’s pullback was a temporary event or the start of a trend.  Prospective home buyers can use our Mortgage Qualification Calculator to determine what size mortgage you can afford and our INTEREST RATES feature to compare lenders in your area to find the mortgage with the lowest rate and fees.

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 the composite mortgage applications index dropped for the week ended May 1st, the purchase applications index gained 1.0% in a positive sign for the real estate market. After being flat last week, the purchase applications index increased for the fifth time in six weeks. The refinance applications index decreased 8.0% after dropping 4.0% for the prior week. Dragged down by the refinance index, the composite mortgage application index, which includes both purchase mortgages and refinancings, decreased 4.6%, doubling the 2.3% decline for the prior week. Although overall mortgage applications declined for the week, the continued strength of the purchase applications segment shows that more home buyers are able arrange mortgage financing. Attractive interest rates are one of the key drivers of home buying activity but rates have inched up over the past couple of weeks. The average interest rate for conforming loans (mortgage amount less than $417,000) increased to 3.92% as compared to 3.85% for the prior week. (Source: Bloomberg)

What it Means for Mortgage Borrowers
Initial reports on the Spring home buying season point to an increase in purchase and mortgage activity. The sustained improvement in the purchase mortgage application index over the past month and a half indicates that more home buyers are finding properties they can afford and using mortgages to finance their purchases. The decline in refinance activity is not too surprising given that many homeowners have already taken advantage of low rates and refinanced their mortgages over the past 12-18 months. Mortgage rates remain low although the .10% uptick in rates over the past two weeks is something to monitor. Low mortgage rates make buying a home more affordable and an unexpected jump in rates could undermine the mortgage and real estate markets. Prospective home buyers can use the INTEREST RATES feature on FREEandCLEAR to review updated interest rates and fees for mortgage lenders in their area. Additionally, get a jump on the Spring home buying season and use our Mortgage Qualification Calculator to determine what size mortgage and how much home you can afford.

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 mortgage applications index dipped slightly for the week ended April 24th.  Home purchase mortgage applications were unchanged for the week after increasing 5.0% for the prior week.  The refinance applications index decreased 4.0% after increasing 1.0% for the prior week.  The composite mortgage application index, which includes both home purchase mortgages and refinancings, decreased 2.3%, reversing a 2.3% increase for the prior week.  Despite the pullback in application activity for the current week, the mortgage application index has  increased four of the past six weeks, showing the overall strength of the mortgage market.  Low interest rates continue to be a key driver of the real estate and mortgage markets.  Mortgage rates remained attractive as the average interest rate for conforming loans (mortgage amount less than $417,000) increased slightly to 3.85% as compared to 3.83% for the prior week.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

With the strong performance of the mortgage application market over the past month and a half you are bound to see some up and down fluctuations in the index from week to week.  After increasing the prior week, purchase mortgage applications remained unchanged for the current week demonstrating that home buyers are able to obtain mortgage financing for their purchases.  Attractive interest rates continue to pull prospective buyers off the sidelines and into the marketplace.  Although refinance applications dropped for the current week, low rates mean that current homeowners should evaluate if now is the right time to refinance.  Prospective home buyers can use the Mortgage Selector Calculator on FREEandCLEAR to determine what size mortgage they can afford and the mortgage program that is right for them.  Current home owners can use our Refinance Calculator to determine how much money you can save by refinancing.  And both prospective and current home owners can use the INTEREST RATES feature on FREEandCLEAR to compare mortgage rates and fees for lenders in their area.

The FREEandCLEAR Mortgage Expert

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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.

Pending home sales increased for the third consecutive month with the pending home sales index for March increasing 1.1% on a month-over-month basis (as compared to February 2015) and 11.1% on a year-over-year basis (as compared to March 2014).  The increase in the index matched the midpoint of  analyst expectations and follows a 3.6% increase in the index reported for February.  The increase in the pending home sales index was driven by gains in the nation’s two largest housing markets — the South (up 4.0% on a monthly basis and 12.4% on an annual basis) and the West (up 1.7% on a monthly basis and 15.6% on an annual basis).  Although the rate of increase for the index slowed in March as compared to February, pending home sales are on a winning streak having been in positive territory every month this year.  The favorable pending home sales report bodes well for future existing home sales and mortgage applications as home buyers under contract finalize their financing and purchases over the next one-to-two months.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

A string of strong pending home sales reports combined with the recent robust existing home sales report for April show that home buyers are gravitating toward the existing home market.  Existing home buyers are taking advantage of low interest rates, available mortgage financing and lower price points as compared to the new home sales market.  The existing home sales market is significantly larger than the new home sales market so the positive reports on pending and existing home sales reflect the growing strength of the broader real estate and mortgage markets.  Prospective home buyers are finding attractive properties to buy and qualifying for mortgage financing to complete their home purchases.  If you have been contemplating buying a home, now may be a good time to start the process.  Use the Mortgage Qualification Calculator on FREEandCLEAR to determine what size mortgage you can afford and use our INTEREST RATES feature to review mortgage rates and fees for lenders in your area.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com

According to a recent report from the U.S. Commerce Department, the rate of homeownership hit a 26 year low of 63.8% in the first quarter of 2015.  The 63.8% figure represents a slight drop compared to the 64.5% homeownership rate reported by the U.S. Census Bureau for 2014.  The homeownership rate peaked at 69.0% in 2004 and has been declining over the past eleven years.

Part of the explanation for the drop in the homeownership rate is the increase in the number of households that are renting, which increased by more than 1.8 million households as compared to the first quarter of 2014.  One of the reasons for the increase in the number of renting households is that more young people are moving out of their parents’ houses and into their own places.  In many cases, renting a house can be the first step before you buy a house so the jump in rental households is a positive indicator for the homeownership rate in the future.  The report, however, also points to the many significant challenges that persist for prospective home buyers including the ability to save for a down payment, tighter credit and lending standards and a tenuous although improving job market.  This is especially true for first-time home buyers, a segment of the population that continues to represent a declining portion of the real estate market.  Additionally, millions of past homeowners that lost their homes to foreclosure or default during the real estate market collapse face the added challenge of trying to qualify for a mortgage with damaged credit.  All these factors combine with a more complicated mortgage process to make buying a home less attainable for more people.

All these reasons are why we developed FREEandCLEAR and make it available to users for free.  We cover programs designed to help first-time home buyers get a mortgage and also outline how past credit challenges impact your ability to get a mortgage.  Additionally, our Mortgage Calculators help you understand what size mortgage you can afford while our Mortgage Process Guide offers money and time-saving tips and insights.  We understand that the mortgage process can be overwhelming and frustrating so we provide borrowers with the best tools and resources in the business to help them achieve their mortgage goals.  We believe that smarter, more empowered borrowers make better decisions when they get mortgages.  By offering borrowers the best tools, resources and rates we hope to reverse the current trend and help more people realize their dream of owning a home.

FREEandCLEAR Mortgage Expert

www.freeandclear.com