Purchase Mortgage Applications Show Signs of Life
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 ended October 31st, the composite mortgage application index, which includes both home purchase mortgages and refinancings, decreased for the second consecutive week although home purchase mortgage applications increased, reversing a recent downward trend.
For the week ended October 31st, the purchase applications index increased 3.0% as compared to the prior week, which was down 5.0%. The refinance applications index decreased 6.0% as compared to the prior week, which was down 7.0%. The composite index, which includes both purchase and refinance mortgage applications, decreased 2.6% as compared to the prior week, which was down 6.6%. Although the composite applications index declined for the second consecutive week, the increase in purchase mortgage applications is a positive sign. In good news for the real estate market, the decline in interest rates over much of October resulted in an uptick in purchase applications toward the end of the month. For the week, interest rates inched up slightly with the average interest rate for conforming loans increasing to 4.17%, as compared to 4.13% for the prior week. (Source: Bloomberg)
What it Means for Mortgage Borrowers
The increase in purchase mortgage activity is a welcome development for the home purchase real estate market. Although it is too early to tell, lower interest rates and moderating housing prices could be bringing home buyers into the marketplace. It will be interesting to watch the mortgage applications index over the coming weeks to see if this week’s results are the start of a new positive trend for purchase applications or a temporary increase due to lower interest rates. As always, the FREEandCLEAR Mortgage Expert Blog will be keeping a close eye on the mortgage applications index as well as all the developments in the mortgage and real estate markets so check back frequently and check out our COMPARE LENDERS feature to keep tabs on interest rates for lenders in your area.
The FREEandCLEAR Mortgage Expert
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