Mortgage applications surge as interest rates fall

Mortgage applications surge as interest rates fall

This past week has been a huge week for mortgage applications. With average fixed-rate 30 year mortgage rates falling to their lowest levels since May 2013, people in the market for a new home or a refinance are taking notice and taking advantage of the low rates. The surge was also spurred by the federal government announcing that the Federal Housing Administration (FHA) will lower its mortgage insurance premiums for the first time since the 2008 housing crash.

In the greatest weekly increase since November 2008, mortgage and refinance applications increased by 49 percent during the week ending January 9. This week also saw the greatest number of new mortgages since August 2013.

Due to continuing overseas turmoil and lowering gas prices, the average rate for a 30-year mortgage last week was 3.73 percent

“The US economy and job market continued to show signs of strength, but weakness abroad and tumbling oil prices have led to further declines in longer-term interest rates,” said chief economist Mike Fratantoni of the MBA in a statement.

A large part of the surge was made up of people applying for refinances on their current mortgages, with refinancing applications up 66.4 percent.

Meanwhile, the Obama administration’s announcement of lowered insurance premiums on FHA-backed loans has drawn some homebuyers into the market to take advantage of future savings. Aimed at increasing access to mortgages for low- and middle-income people, the FHA has been having trouble meeting its institutional goals since the 2008 housing crash, but with the economy recovering, it is finally able to lower its premiums again.

To take advantage of low interest rates and apply for a refinance or a new mortgage, contact us today.

Sources:

http://www.reuters.com/article/2015/01/14/us-usa-economy-mortgages-idUSKBN0KN18Y20150114

http://www.wsj.com/articles/mortgage-applications-soar-as-consumers-snap-up-low-rates-1421236802