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Low Mortgage Rates Continue to Boost Application Activity
|Despite predictions of higher mortgage rates throughout the second half of the year, economic factors have helped keep rates low, providing buyers with high affordability and current homeowners with the opportunity to refinance their mortgage.
Thursday, December 27th, 2012
Despite predictions of higher mortgage rates throughout the second half of the year, economic factors have helped keep rates low, providing buyers with high affordability and current homeowners with the opportunity to refinance their mortgage. The latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association reveals activity increased from the week before, as many buyers are likely looking to close on a new home before the new year.
Data for the week ending December 7 shows the Market Composite Index increased 6.2 percent on a seasonally adjusted basis, while it remained 6 percent higher than last week when measured on an unadjusted basis. While mortgage rates have kept low, thanks to a slowly recovering economy, many buyers have dismissed rising home prices, as they are indicative of a healthier housing market. The increase in interest benefits both buyers and sellers, as the gap between supply and demand has become notably smaller throughout 2012.
In addition, the seasonally adjusted Purchase Index grew 1 percent from the week prior, though it was down 4 percent when measure on an unadjusted level. The PI remains 9 percent higher than this time a year ago. Consumers have been more optimistic regarding the economy and the national housing market, which has also likely contributed to application activity during a typically slower season for the industry.
Refinancing continues to be a popular reason for mortgage applications, and accounted for 84 percent of the total volume submitted the first week of December. This is up from the figure recorded a week ago, when refinances made up 82 percent of all activity. Altering the initial mortgage chosen will probably continue to be popular, as mortgage rates are expected to remain low. The government-sponsored enterprise Freddie Mac predicts average rates for fixed-rate mortgages will not reach above 4 percent until the end of 2013.
"Continued uncertainty due to the lack of resolution regarding the fiscal cliff led interest rates lower last week, with mortgage rates reaching a new low in our survey," said Mike Fratantoni, vice president of research and economis for MBA.
This week marks the fifth week of increased applications, which is unusual for the fall and winter season when many homeowners are less willing to relocate.
National real estate trends have a major impact on the real estate market on a daily basis. Keeping up-to-date on the latest news and notes posted by GL Homes can make sure those looking for South Florida homes know exactly how the current market will affect them.