Housing Rebound? Mortgage Applications Up After Long Slump

A key index that gauges mortgage applications for purchases and refinancing shot out of a long slump last week, as historically low interest rates spurred initial borrowing activity.

The Mortgage Bankers Association’s index of overall mortgage applications rose 17.7 percent last week, from one week earlier.

The index that measures refinancing soared 21.1 percent from the previous week, the highest jump since May 2009.

The index that gauges home purchase loan applications increased 7.3 percent – the first increase in 6 weeks.

It is unclear whether the figures from last week mark the beginning of a rebound. The expiration of homebuyer tax credits April 30 has caused a downturn in home sales activity, despite mortgage rates near or at record low levels.

“While it is clear that purchase applications in May dropped sharply as a result of the tax credit induced increase in applications in April, it is unclear whether we are seeing the beginnings of a rebound now,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.

The four week moving average is down 1.7 percent for the seasonally adjusted purchase index, while this average is up 5.5 percent for the refinance index. 

The average interest rate for 30-year fixed-rate mortgages increased to 4.82 percent from 4.81 percent, with points decreasing to 0.89 from 1.02 for 80 percent loan-to-value (LTV) ratio loans, the MBA said. 

However, the effective rate decreased from last week because of the decline in points. 

See Related Articles: 

• Post-Tax Credit Slump: Homebuilder Confidence Sinks
• Bank Repos at New High in May, While Foreclosure Filings Ease
• Renting vs. Buying in Foreclosure Era: Trulia’s New Indices