Total mortgage applications, including both refinancing and home-purchase loans, dipped 1.5 percent last week from the week prior on a seasonally adjusted basis as mortgage rates continued to tick up, the Mortgage Bankers Association reports in its weekly mortgage market survey.
Applications for home purchases, viewed as a gauge of future homebuying activity, dropped 4 percent from the previous week to its lowest level since April. Yet, home purchase applications are still 11 percent higher than the same week one year ago.
“The drop this week may indicate borrowers being wary of the recent runup in mortgage rates,” said Mike Fratantoni, MBA’s chief economist.
Source: “Weekly Mortgage Applications Drop 1.5% as Rates Rise,” CNBC (May 20, 2015)
Lenders are showing signs of loosening up when it comes to home buyers seeking a mortgage. The Mortgage Bankers Association’s Mortgage Credit Availability Index ticked up slight in April, following an increase the previous month too. Increases in the index are indicative of an overall loosening of credit.
MBA’s index shows that mortgage credit availability has increased consistently over the last several months, coinciding with recent announcements from the federal government of programs that have been designed to open the credit box. Fannie Mae and Freddie Mac’s move to back 3 percent down payment loans as well as the Federal Housing Administration’s action to reduce its mortgage insurance premiums have helped ease credit, MBA Chief Mike Fratantoni says.
Other government offerings also helped to ease credit even more in the latest report, reflecting April data, MBA notes.
Source: “MBA: It Keeps Getting Easier to Get a Mortgage,” HousingWire (May 12, 2015) and “REALTORS® Confidence Index,” National Association of REALTORS® (April 2015)
As home prices inch up, more home owners are tapping into their equity. One in four home owners have a home equity line or loan, and more than half – 55 percent – opened it for a specific purpose and haven’t use it since, finds the 2015 BMO Harris Bank Homebuyers Report.
What are they using it for? Forty-seven percent of home owners say they use their home equity account for home improvements, followed by 22 percent who use it to consolidate debt and 20 percent who use it to make a major purchase, such as buying a car.
According to the survey, home owners say they turn to home equity lines of credit over other types of financing because the potential to use the interest paid as a tax deduction; it provides a better interest rate than other options; and the ease of accessing the funds and the ability to get the right amount needed.
Source: “Home Improvements Are the Most Popular Use of a Home Equity Account,” RISMedia (May 16, 2015)
For the third consecutive week, mortgage rates continue to inch up, with the 30-year fixed-rate mortgage nearing its highest level for 2015 at 3.85 percent this week, Freddie Mac reports in its weekly mortgage market survey.
Freddie reports the following national averages for the week ending May 14:
- 30-year fixed-rate mortgages: averaged 3.85 percent, with an average 0.6 point, rising from last week’s 3.80 percent average. Last year at this time, 30-year rates averaged 4.20 percent.
- 15-year fixed-rate mortgages: averaged 3.07 percent, with an average 0.6 point, rising from last week’s 3.02 percent average. A year ago, 15-year rates averaged 3.29 percent.
- 5-year hybrid adjustable-rate mortgages: averaged 2.89 percent, with an average 0.5 point, dropping from last week’s 2.90 percent average. A year ago, 5-year ARMs averaged 3.01 percent.
Source: Freddie Mac
A sharp rise in mortgage rates dampened mortgage application volume last week, the Mortgage Bankers Association reports. Total mortgage application volume for both refinancings and home purchases fell 3.5 percent on a seasonally adjusted basis for the week ending May 8. Still, volume is 14 percent higher than a year earlier.
Broken out, applications for refinancings attributed to most of the drop in loan demand last week. Refinancing applications fell 6 percent week-over-week and have fallen 16 percent in the past four weeks alone, MBA reports. Applications for home purchases, which are viewed as a leading indicator of future home sales, mostly held steady last week, down just 0.2 percent from the previous week. Applications for home purchases are 12 percent higher than a year earlier.
MBA reports that the 30-year fixed-rate mortgage rose to 4 percent last week; it had averaged 3.93 percent the week prior.
Source: “Weekly Mortgage Applications Fall 3.5% as Rates Rise,” CNBC (May 13, 2015)
The Federal Housing Finance Agency announced that it would be extending its participation in the Home Affordable Mortgage Program and the Home Affordable Refinance Program through the end of 2016.
“These programs have provided critically important relief for many borrowers by allowing them to lower their monthly payments and, as a result, have prevented many foreclosures,” says Mel Watts, FHFA director, regulator of Fannie Mae and Freddie Mac.
Under HARP, home owners who have loans backed by Fannie Mae or Freddie Mac can refinance at lower interest rates, even if their home has lost value. HAMP, on the other hand, provides incentives for lenders to alter mortgage terms of borrowers in order to make the loans more affordable.
HAMP and HARP were started after the housing crisis to help home owners avoid foreclosure. While the number is lessening, Watt estimates that about 600,000 borrowers could still be helped by HARP.
Source: “Fannie, Freddie Participation in Foreclosure Prevention Programs Extended,” Reuters (May 8, 2015)
Home ownership can lead to higher levels of well-being, according to data from the OECD Better Life Index, which gauges the quality of life worldwide by factoring in such things like housing, jobs, civic engagement, health and safety.
The heightened sense of happiness that comes from home ownership may be more than just getting a new home but more closely tied to the basic need for shelter, says Aida Caldera Sanchez and Caroline Tassot, authors of an analysis about the index. Also, home ownership can lead to status and independence – qualities that often are linked to happiness, their analysis shows.
On the well-being index, housing outperformed all the all other indicators monitored – like education, safety, and environment – by the highest amount in the Midwest, with 75 percent of the states ranking housing as most important to happiness. In the South, housing tops all other indicators in 70.6 percent of the states, and in the West housing was tops in only 15 percent of the states compared to the other indicators.
View how housing stacks up in your area at the OCED Regional Well-being website.
Source: OCED Regional Well-being and “Homeownership Linked to Happiness,” RISMedia (May 7, 2015)
The 30-year fixed-rate mortgage climbed to average 3.80 percent this week while 15-year rates rose above 3 percent, both reaching their highest levels in nearly two months, Freddie Mac reports in its weekly mortgage market survey.
Freddie Mac reports the following national averages for the week ending May 7:
- 30-year fixed-rate mortgage: averaged 3.80 percent, with an average 0.6 point, rising from last week’s 3.68 percent average. Last year at this time, 30-year rates averaged 4.21 percent.
- 15-year fixed-rate mortgages: averaged 3.02 percent, with an average 0.6 point, rising from last week’s 2.94 percent average. A year ago, 15-year rates averaged 3.32 percent.
- 5-year hybrid adjustable-rate mortgages: averaged 2.90 percent, with an average 0.4 point, up from last week’s 2.85 percent average. Last year at this time, 5-year ARMs averaged 3.05 percent.
- 1-year ARMs: averaged 2.46 percent, with an average 0.4 point, dropping from last week’s 2.49 percent average. A year ago, 1-year ARMs averaged 2.43 percent.
Source: Freddie Mac
The Consumer Financial Protection Bureau finds that one in every 10 adults – or 26 million people – do not have any credit history with a nationwide consumer reporting agency, according to their new report. Black consumers, Hispanics, and consumers in low-income neighborhoods are more likely to have no credit history with a national consumer reporting agency or have enough credit history to produce a credit score.
Consumers with a limited or nonexistent credit history face greater challenges in getting credit, such as in being able to qualify for a mortgage to buy a home, according to CFPB. Credit histories help consumer reporting agencies determine how likely consumers are to repay their debts and the information is used to produce credit reports and scores.
“Today’s report sheds light on the millions of Americans who are credit invisible,” says CFPB Director Richard Cordray. “A limited credit history can create real barriers for consumers looking to access the credit that is often so essential to meaningful opportunity—to get an education, start a business, or buy a house. Further, some of the most economically vulnerable consumers are more likely to be credit invisible.”
Source: Consumer Financial Protection Bureau
Bathroom remodeling edged out kitchens as the most popular type of remodeling project, according to a new survey by the National Association of Home Builders.
Through 2009 kitchens dominated home remodeling projects as the most common, that trend switched in 2010 and then again in 2014 as bathroom remodeling takes the throne.
Bathroom remodeling was cited as the most common remodeling project in 2014 by 78 percent of remodelers, just barely edging out kitchen remodels at 77 percent, NAHB reports. Other types of remodeling projects trail kitchens and baths by a wide margin.
Source: “Remodeling Jobs – Baths Edge Kitchens Again for Top Spot,” National Association of Home Builders Eye on Housing blog (May 1, 2015)