Relative to last week, applications for home purchase mortgages fell 7.5% on a seasonally adjusted basis, more than offsetting the 6.6% gain in the prior week. Relative to a year ago, the seasonally adjusted purchase figure is up 17.0%.
Applications volume has slumped in July and August of the last two years. However, foot traffic this year has outpaced last year and remained strong through June. The 4-week moving average for purchase applications ticked downward, but remains high.
The average rate on a 30-year fixed rate mortgage was unchanged at 4.23%, but 10 basis points less than they were this time in 2014.
While mortgage rates are nearly 40 basis points (BP) above their January low, rates are below last summer and nearly 40 bp lower than the summer peak in 2013 following the Fed’s suggestion that it would reduce the pace of its MBS purchase program. What’s more is that the 40 bp increase in 2015 was smaller than the 100bp increase during the “taper tantrum” and partially offset by better FHA pricing.
Strong job gains in 2014 combined with better FHA pricing and product availability and access have boosted buyer confidence this spring and summer.
NAR is forecasting the average rate for a 30-year fixed mortgage to remain under 4.5% through the end of 2015 before averaging 4.8% in 2016.
Ken Fears is the Manager of Regional Economics and Housing Finance Policy. He focuses on regional and local market trends found in the Local Market Reports and the Market Watch Reports . He also writes on developments in the mortgage industry and foreclosures.