Mortgage Applications End 3-Week Winning Streak

Mortgage Applications End 3-Week Winning Streak

Apr 15 2015,

Applications for purchase mortgages have ended three straight weeks in which their volume increased an average of 6 percent.  The Mortgage Bankers Association (MBA) said today that those applications dropped by 3 percent on a seasonally adjusted basis during the week ended April 10 and 2 percent on an unadjusted basis.    They did however remain 7 percent higher than in the same week in 2014.

The decline in the purchase component brought MBA’s Market Composite Index, a measure of all application activity, down by 2.3 percent on an adjusted basis and 2 percent unadjusted compared to the week ended April 3.  The Refinance Index also declined 2 percent but applications for refinancing represented 58 percent of the total, up one percentage point from the week before.

The FHA share of total applications increased to 13.5 percent from 13.2 percent the previous week and the VA share rose from 10.7 percent to 11.1 percent.  The USDA portion of the total was unchanged at 0.8 percent.

Mortgage rates were mixed and flat.  The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,000 or less) increased by one basis point to 3.87with points increasing to 0.38 from 0.27.  The effective rate increased from the previous week.

The average rate for 30-year FRM with jumbo loan balances (greater than $417,000) was 3.84 percent with 0.35 point compared to a rate of 3.81 percent with 0.26 point a week earlier.  The effective rate was also higher.

The sole decline during the week was in the contract rate for FHA-backed 30-year FRM which decreased from 3.69 percent to 3.67 percent.  Points increased to 0.23 from 0.18 and the effective rate was unchanged.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.16 percent from 3.15 percent.  Points remained at 0.29 and the effective rate increased.

The market share for adjustable rate mortgages (ARMs) declined from 5.5 percent to 5.4 percent for the week. The average 5/1 ARM interest rate increased to 2.82 percent from 2.76 percent, with points decreasing to 0.40 from 0.45. The effective rate also rose.

MBA’s Weekly Mortgage Application Survey, which has been conducted since 1990, covers over 75 percent of all U.S. retail residential mortgage applications.  Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100 and interest rates assume a loan with an 80 percent loan-to-value ratio and points that include the origination fee.

Reference Mortgage News Daily!

Increased Vacation Home Sales

Vacation home sales exploded last year

The beach was the most popular vacation home location.

More Americans may be looking to get away as vacation home sales jumped last year.

Vacation home purchases made up 21% of all home sales last year at an estimated 1.13 million, the highest level since 2003 and a 57% increase from 2013, according to a report from the National Association of Realtors.

The stock market’s strong performance and gains in the labor market are creating more confidence among buyers, according to Lawrence Yun, NAR’s chief economist. “The top 10% of families are feeling much more financially confident.”

The typical second-home buyer had a median household income of $94,380, 58% had two income earners and 48% financed less than 70% of the purchase price, according to NAR.

A beach location was the most popular among vacation buyers, and 54% of properties were single-family homes.

The survey included close to 2,000 adults who made a residential purchase last year, not including institutional investment sales.

Related: Best places for vacation home deals

Tight inventory levels continue to plague many housing markets and push prices of primary residences up. However, the median price for vacation home buyers came in at $150,000 last year, an 11% decrease from 2013. Distressed properties made up 45% of vacation home sales last year, the NAR reported.

“People looked at long-term opportunities and grabbed low bargain prices,” Yun said.

He added that popular vacation home areas, like the beach and mountains, tend to have a slower economic recovery pace.

As more buyers scooped up vacation homes, the share of first-time and investment buyers declined in 2014. Investment home sales dropped 7.4% last year.

Generally, investment and vacation purchases tend to move in the same direction, Yun explained, but the recent rebound in home appreciation has priced out many investment buyers, particularly institutional ones as their main goal tends to be rental income.

Related: Sailing around the world in retirement: How we did it

A third of second-home buyers plan to use their purchase for vacation, and 46% of the homes were located in the South.

Baby boomers on the cusp of retirement are also playing a role in the sales surge, according to Yun, with 19% of all vacation home buyers planning to eventually make their second home their primary residence.

“If they have the financial capacity to buy a vacation house today, once they officially retire in three to five years, they will turn that home into their primary residence.”

Reference CNN Money