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 update discusses the latest mortgage applications data.
- Seasonally adjusted applications to purchase homes surged 9.4% in the week ending February 28th, reversing four weeks of significant declines. The purchase index is 19.3% lower than the same time in 2013. Purchase applications slid nearly unabated since mid-January.
- The average rate for a 30-year fixed rate mortgage as reported by the Mortgage Bankers Association eased six basis points from the prior week to 4.47%, and has eased nearly 16 basis points in the last four weeks.
- Both purchase and refinance applications indexes improved this week by 9% and 10%, respectively. This pattern would suggest that the trend was driven by financial market improvements rather than a shift in consumer tastes or weather.
- The improvement was nearly uniform between conventional and government financing which improve 9.2% and 10.1%, respectively.
- Purchase applications improved dramatically this week, the first hint of stabilization following a steady downward trend since January. Rates have eased only modestly and the improvement in applications hints at changes in the financing market. Originators were very concerned about the January 10th implementation of the qualified mortgage rule. Applications for purchase surged 11.5% in the week ending on the 10th. Demand may have been pulled forward ahead of the deadline skewing recent results or lenders may have become more comfortable with the rules and their preparations for it since January 10th. The market will gain more clarity in the weeks ahead.