Tuesday, December 15, 2009

Mortgage Demand Hits Highest Level in Two Months

From Housing Zone:

The Mortgage Bankers Association announced that mortgage applications, based on the group's seasonally adjusted market index, rose 8.5% to the highest level since early October. The bulk of the activity was spurred by current homeowners refinancing existing mortgages to lock in interest rates that continue to hover around all-time lows. Demand for loans to refinance existing loans was up 11.1%. Refinancings represent about three-fourths of all applications. But purchasing activity is on the upswing too. Requests for loans to buy a home went up by 4%.

Here’s how rising mortgage applications could impact home builders:

* The four-week moving average of the purchase index is up 2.3%, a sign that more buyers are in the market.
* Interest rates rose slightly, pushing potential buyers to jump into the market before rates rise further. The average interest rate for a 30-year fixed rate mortgage rose slightly to 4.88% from 4.79%. The record low of 4.61% was set last March.
* 15-year fixed rate mortgages increased slightly to 4.33% from 4.27%
* Rates for one-year ARMs decreased to 6.55%
* More buyers are expected to enter the market since an $8,000 government tax credit for first-time buyers was recently extended.
* The government program now also includes move-up buyers, a good sign for builders in that market. Move-up buyers are eligible for a $6,500 tax credit for loan closings completed by June 30.

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