Demand for New Loans Up 16.4% as Rates Hold Below 5.00%
Mortgage rates held below 5.00 percent for the third consecutive week helping refinance and purchase loan demand increase, according to a weekly report released by the Mortgage Bankers Association (MBA) this morning.
The MBA said, in the week ending October 2, 2009, the average mortgage rate for 30-year fixed rate loan fell 5 basis points to 4.89 percent from 4.94 percent in the previous week. That in combination with the soon to expire $8,000 tax credit for first time home buyers helped mortgage application volume increase by 16.4 percent.
Both the refinance and purchase indexes contributed to the increase in application activity. The refinance index increased 18.2 percent from the previous week to the highest level seen since May while the purchase index rose 13.2 percent from one week earlier, putting the index at its highest level since January.
Refinance activity increased to 66.3 percent of total applications from 65.3 percent the previous week. For the month of September, the Refi Index averaged 2845, up 38% from August's average.
Of particular note, the government purchase index is at a record level after a 14.4 percent increase from the week before.
Last week the FHFA reported on the delinquencies in Fannie Mae and Freddie Mac's portfolios. In that report they stated the following regarding the GSE portfolios:
“The number of first-lien residential mortgages with credit score at origination of 660 or higher increased, while mortgages with less than 660 credit score at origination decreased. The increase in the number of loans with 660 or higher credit score and decrease in loans with less than 660 credit score at origination reflect actions taken by both Enterprises to increase the credit quality of new business and continues a trend seen over the past year.”
This further illustrates that borrowers with higher risk credit profiles are more likely to utilize government lending programs instead of conventional loan programs. Given the state of the labor market and tight credit conditions, it is expected that many borrowers will continue to rely on the FHA for home financing needs
All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.
Leave a Comment
By John Gittelsohn August 24, 2020, 4:00 AM PDT Some of the largest real estate investors are walking away from Read More...Late-Stage Delinquencies are Surging
Aug 21 2020, 11:59AM Like the report from Black Knight earlier today, the second quarter National Delinquency Survey from the Read More...Published by the Federal Reserve Bank of San Francisco
It was recently published by the Federal Reserve Bank of San Francisco, which is about as official as you can Read More...