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. Driven by a significant significant boost in refinance application activity attributable to falling interest rates, the mortgage application index for the week ended October 17th, 2014 increased for the third consecutive week.
For the week ended October 17th, the refinance application index increased a significant 23.0% as compared to the prior week, which was up 11.0%. The purchase application index decreased 5.0% as compared to the prior week, which was also down 1.0%. The composite index, which includes both purchase and refinance mortgage applications, increased 11.6% as compared to the prior week. The increase in the index is attributed to the continued decline in interest rates, which has a more immediate impact on refinancing applications, in comparison to purchase applications which typically take longer to respond to changes in interest rates (because it takes longer for consumers to find and buy a home and apply for a mortgage in response to lower interest rates). The average interest rate for conforming loans declined to 4.10%, as compared to 4.20% for the prior week. (Source: Bloomberg)
What it Means for Mortgage Borrowers
The decline in interest rates continues to have a strong effect on existing borrowers who are taking advantage of lower interest rates to refinance their current mortgages. Over time, lower interest rates and flattening home prices should also pull more home buyers into the market and boost purchase mortgage applications. Use the FREEandCLEAR Mortgage Refinance Calculator to determine how much money you can potentially save by refinancing your existing mortgage and lowering your interest rate. Additionally, use the COMPARE LENDERS feature on FREEandCLEAR to monitor interest rates for lenders in your area.
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In our effort to cover important trends that affect the mortgage market, FREEandCLEAR keeps a close eye on existing home sales, which is the number of previously constructed housing units that are sold in a month.  The existing home sales figure is reported separately from the new home sales figure, which is the number of newly constructed homes that are sold in a month.  An increase in existing home sales reflects improvement in the housing market while a decrease in existing home sales reflects a weakening of the housing market.  In addition to reporting the number of housing units sold, the existing home sales report also includes information on the supply of units for sale as wells as the median and average existing home sales price.

The existing home sales report, issued on a monthly basis, includes statistics for the prior month.  The report for October 2014 showed that existing home sales in September increased 2.4% on a month-over-month basis and decreased 1.7% on a year-over-year basis to an annualized 5.17 million units (so if you take the home sales figure for September and multiplied it by twelve).  Sales of condominiums increased 5.2% to 610,000 units while sales of single-family homes increased 2.0% to 4.56 million units.  The number of existing homes available for sale, known as supply, decreased by 10,000 units to 2.30 million units.  The median existing home sales price decreased 4.0% to $209,700.  The September existing home sales figure came in above market expectations due to due to lower housing prices and attractive interest rates pulling buyers into the real estate market. (Source: Bloomberg)

What it Means for Mortgage Borrowers

The uptick in existing home sales reverses the decline reported in August and suggests that buyers are slowly moving into the market.  The recent decline in interest rates combined with the moderate pullback in housing prices could accelerate the pace of home sales.  As always, FREEandCLEAR will closely watch the existing home sales report for November to monitor this trend.  Check out the COMPARE LENDERS feature on FREEandCLEAR to keep track of interest rates and visit the FREEandCLEAR Mortgage Expert Blog to stay updated on the latest developments in the mortgage market.

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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.

The Housing Starts report issued in October 2014 showed that housing starts and permits rebounded in September after a significant decline in August.  The report showed that housing starts increased 6.3% in September to approximately 1,017,00 units while permits increased 1.5% to 1,018,000.  Housing starts exceeded analyst expectations while the permit figure came in slightly below analyst expectations.  The increase in housing starts was driven by a 16.7% jump in the multifamily segment while single family starts showed a more modest increase of 1.1%.  Multifamily permits increased 1.5% in September while single family permits declined by 0.5%.  The single family segment is larger than the multifamily segment.  The Housing Starts report continues to fluctuate on a monthly basis as the September increases compare to a 14.4% decline in starts and a 5.6% decline in permits in August. (Source: Bloomberg)

What it Means for Mortgage Borrowers

Because the Housing Starts report is so volatile, it is challenging to draw significant conclusions from any single month but the October report continues the trend of the multifamily segment out-performing the single family segment.  Additionally, the relatively positive housing starts figures for October are in comparison to disappointing figures for September but the overall pace of new home construction activity continues to increase, albeit at a relatively slow rate. The relative strength of the multifamily segment as compared to the single family segment means that home buyers should have more multifamily options such as condominiums or duplexes when looking for a newly constructed home.  Additionally, it will be interesting to see if the slowdown in single family housing starts pushes more home buyers into the existing home sales market, which showed weakness according to the most recent existing home sales report.  Whether you are thinking about buying a new or existing home, use the FREEandCLEAR Mortgage Qualification Calculator to determine what size mortgage you can afford and check out our Mortgage Expert Insights for money and time-saving mortgage advice and tips.

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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.

For October 2014, the Housing Market Index declined to 54 as compared to 59 in September 2014.  The weaker-than-expected October figure reflected decreases in the three components that comprise the index — home buyer traffic, new home sales and future sales.  The October figure is disappointing in comparison to the positive September Housing Market Index figure which was boosted by increases in all three index components, including especially strong home buyer traffic.  In short, the index suggests that demand for newly constructed houses, especially from first-time home buyers, remains inconsistent and relatively fragile, despite the recent decline in interest rates. (Source: Bloomberg)

What it Means for Mortgage Borrowers

The decline in Housing Market Index may make builders more aggressive as they seek to sell newly constructed homes.  Home buyers could benefit from increased financial incentives or potential price reductions, although this is less likely.  Additionally, lower interest rates may also bring first-time home buyers into the marketplace, although the recent pullback in rates did not appear to have an immediate impact on the new home sales or buyer traffic.  Potential home buyers looking to take advantage of favorable market conditions can use the FREEandCLEAR Mortgage Qualification Calculator to determine what size mortgage they can afford and the COMPARE LENDERS feature on FREEandCLEAR to keep track of interest rates.

The FREEandCLEAR Mortgage Expert

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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.  Driven by a significant increase in refinance application activity due to lower interest rates, the mortgage application index for the week ended October 10th, 2014 increased for the second consecutive week.

For the week ended October 10th, the refinance application index increased 11.0% as compared to the prior week.  The purchase application index decreased 1.0% as compared to the prior week. The composite index, which includes both purchase and refinance mortgage applications, increased 5.6% as compared to the prior week.  The increase in the index is attributed to the recent decline in interest rates, which drives refinancing applications, although purchase applications remained relatively lackluster.  The average interest rate for conforming loans declined to 4.20%, its lowest level since June 2013.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

The decline in interest rates is having an immediate impact on existing borrowers who are prudently refinancing to lock in a lower interest rate and monthly mortgage payment.  FREEandCLEAR believes that continued lower interest rates will eventually pull more home buyers into the market especially if housing prices continue to stabilize.  If first-time home buyers become more active in the marketplace this could have a significant impact on the real estate and mortgage markets.  If you are thinking about buying a home for the first time, check out the FREEandCLEAR First-Time Home Buyer Mortgage Cheat Sheet.  Existing homeowners can review our Refinance Process Guide to walk them through the process step-by-step.  Additionally, use the COMPARE LENDERS feature on FREEandCLEAR to check interest rates in your area.

The FREEandCLEAR Mortgage Expert

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At FREEandCLEAR, we follow the 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.  Mortgage application activity for the week ended October 3rd, 2014 increased slightly, reversing the recent flat-to-downward trend in the index .

For the week ended October 3rd, the purchase application index increased 2.0% as compared to the prior week.  The refinance application index increased 5.0% as compared to the prior week. The composite index, which includes both purchase and refinance mortgage applications, increased 3.8% as compared to the prior week.  The increase in the index is attributed to the recent decline in interest rates, which drives refinancing applications, and signs of improvement in the home sales market, especially the new home segment which has shown strong growth recently.  (Source: Bloomberg)

What it Means for Borrowers

The increase in the mortgage application index is a welcome development for mortgage lenders who have experienced a decline in applications over much of 2014.  Borrowers appear to be wisely taking advantage of the pullback in interest rates by refinancing their existing mortgages while home buyers may be starting to be pulled into the market by flattening prices and attractive opportunities in the new home market.  Homeowners can use the FREEandCLEAR Mortgage Refinance Calculator to determine how much money they can save by refinancing and home buyers can use our Mortgage Qualification Calculator to determine what size mortgage they can afford.  Additionally, check out the COMPARE LENDERS feature on FREEandCLEAR to monitor interest rates for lenders in your area and see if they continue their recent downward trend, which is always good news for borrowers.

The FREEandCLEAR Mortgage Expert

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At FREEandCLEAR, we follow the 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.  Mortgage application activity for the week ended September 26th, 2014 was relatively flat, continuing the overall lackluster trend observed over the past quarter.

For the week ended September 26th, the purchase application index was unchanged as compared to the prior week.  The refinance application index declined a modest .3% as compared to the prior week. The composite index, which includes both purchase and refinance mortgage applications, declined .2% as compared to the prior week.  In total, mortgage application activity held steady as compared to the prior week, consistent the recent general trend showing flat-to-declining mortgage applications.  The decline in the index is attributed to a cooling housing and refinancing market after years of strong performance.  On the positive side, interest rates declined slightly for the week although this did not have an immediate impact on mortgage applications.  (Source: Bloomberg)

What it Means for Borrowers

Borrowers welcomed the slight decrease in interest rates after a slight increase in rates over the past several weeks.  Additionally, the longer the mortgage market remains lackluster, the more aggressive lenders will become for borrowers’ mortgage business.  Always remember to compare multiple lenders when shopping for a mortgage or refinancing.  Borrowers can use increased lender competition to their advantage by negotiating better terms for their mortgage such as a lower interest rate or reduced closing costs.  Check out the COMPARE LENDERS feature on FREEandCLEAR to review interest rates and fees for multiple lenders in your area.

The FREEandCLEAR Mortgage Expert

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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.  For example, the report released in September contains information on housing prices in the month of July.

In welcome news for prospective home buyers, the FHFA House Price Index for September 2014 showed that July housing prices increased only 0.1% as compared to June and 4.4% on a year-over-year basis (so as compared to July 2013).  FHFA House Price Index figures for July came in below analyst expectations and declined relative to the June figures on both a month-over-month and year-over-year basis.  The S&P / Case-Shiller Home Price Index for September 2014 showed that housing prices declined 0.5% in July as compared to June but increased 6.7% on a year-over-year basis, although this increase was less than the 8.1% year-over-year increase reported for June 2014.  Similar to the FHFA House Price Index figures, the S&P / Case-Shiller Home Price Index came in below expectations and declined relative to the June figures. The most recent FHFA and S&P / Case-Shiller home price indices show that nationwide housing prices continue to flatten.  It is important to highlight that these indices reflect the trend in nationwide housing prices and housing prices for a specific region or city can vary significantly.  In general, however, all signals point to a cooling off of housing prices after years of significant price increases. (Source: Bloomberg)

What it Means for Mortgage Borrowers

Home buyers who had been deterred by a lack of affordable housing inventory could potentially enter the real estate market as prices stabilize.  First-time home buyers have been particularly reluctant to enter the market so flattening prices combined with relatively low interest rates could bring a new wave of buyers into the marketplace.  It is important to emphasize that each city has a unique housing price dynamic and prices in certain markets continue to rise, but the but on a national basis, housing prices are gradually becoming more affordable for more people.  Check out the COMPARE LENDERS function on FREEandCLEAR to review interest rates for lenders in your city and use our First-Time Home Buyer Mortgage Cheat Sheet as your starting point for the mortgage process.

The FREEandCLEAR Mortgage Expert

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