Mortgage Purchase Applications

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s second economic update discusses mortgage purchase applications.

• Applications to purchase homes slipped 0.5% from last week on a seasonally adjusted basis, according to data released this morning by the Mortgage Bankers Association. The average rate for a 30-year fixed rate mortgage climbed nearly 40 basis points, from 4.1% to 4.53%, from the beginning of November through the first week in January. The steady climb has weighed on consumer sentiment and affordability.
• In a bit of a surprise, conventional purchase mortgage applications ticked upward by 0.1% while applications for government financed loans fell 1.9%.
• Yesterday the MBA announced that its index of mortgage credit availability improved by a modest 0.6% for the month. Credit availability has had a small improvement since its low in 2012 with more lenders offering lower down payment loans to highly qualified borrows, but credit access remains well below levels seen in 2007.
• Mortgage applications fell in four of the last six weeks following the steady rise in mortgage rates. Rates are roughly at the same level as in August. Rates are likely to rise through the spring as the Federal Reserve tappers its purchases of mortgage backed securities and Treasuries. This action will press up on mortgage rates, eroding affordability in an environment of tight credit.