May 14, 2014
Mortgage applications surged during the week ending May 2, according to Mortgage Bankers Association figures.
The number of these requests for financing spiked during a time when borrowing costs for many home loans moved lower, according to HousingWire. These declines in interest rates were widespread, affecting mortgages with balances falling within the conforming loan values, and those with jumbo balances.
MBA data illustrate rising mortgage applications
The MBA data show that mortgage applications rose by 5.3 percent from the prior period. The Market Composite Index, a leading measure of the number of applications for mortgages, gained 5.3 percent on a seasonally-adjusted basis between the two weeks. On an unadjusted basis, it moved up by 6 percent.
This increase in requests happened after they moved lower for two consecutive weeks, according to MBA figures reported on by HousingWire.
The two versions of the Purchase Index also moved higher during the week ending May 2 from the former time. The unadjusted version of this measure surged 10 percent between the two weeks, while the seasonally-adjusted measurement rose by 9 percent.
Rise in applications 'bright spot'
"The increase in mortgage applications is a bright spot in a spring home buying season that has been late to bloom," Quicken Loans vice president Bill Banfield told the news source. "While all rates are low right now, the 15-year product is a particularly attractive option for those looking to buy or refinance, with rates sitting almost a full point lower than the 30-year, and the added bonus of saving tens of thousands of dollars in interest over the life of the loan."
Refinancings fall to minority of applications
While overall applications rose during the week, refinancings moved lower, as a key measure of these transactions fell 2 percent from the prior week. In addition, these particular requests dropped to 49 percent of all applications, from 50 percent in the prior period. Mike Fratantoni, MBA's chief economist, commented on the broad trends of the market.
"It is official: we are in a majority purchase market for the first time since 2009," he said. "A sizeable increase in purchase applications last week likely reflected the impact of somewhat lower mortgage rates as well as continued growth in the job market, as confirmed by Friday's employment report from the BLS. Despite the strong increase in the purchase market last week, volume continues to run 16 percent behind last year's pace."
The rising applications could potentially bolster loan sales by increasing the supply of this type of debt. Financial institutions that would like to get involved in these transactions and get some of this debt on their books might consider contacting Garnet Capital Advisors, which has significant experience in this space.