After experiencing a decrease during the past month or two, it seems as if people are ready to jump into the land of homeownership again, with mortgage application volumes increasing to 2.7 percent last week, in comparison to the week beforehand; this as per the Mortgage Bankers Association and their seasonal adjusted index. In fact, according to this index, application volume was also eight percent higher than this time last year.
As such, purchase applications triggered gains, which increased by 4 percent for the week, and 5 percent for the year. May tends to be a strong month for home selling, as many want to purchase a home and close it so that they move can be done during the summer months, while the kids are out of school.
Meanwhile, the number of houses up for grabs at the low-end of the housing market lacks, and there has been an increase of high-end houses up for sale; so, buyers in this market have a good variety to choose from. Prices are easing a tad; however, they still tend to be high within a majority of major housing sectors when you compare the numbers to this time last year.
The loan size for purchase applications, on average, was quite high within the survey, providing additional proof that a bulk of homebuying currently is around upsizing homes, versus entering the housing market.
Refinance home loan applications hit one percent higher for the week, and 13 percent higher when compared to this time last year; interestingly enough, interest rates were also 37 basis points more. Refinancing activity lowered to 37.9 percent of total mortgage applications, this from 38.8 percent from the week before.
The contract interest rate, according to MBA.com for a fixed-rate mortgage of 30 years with conforming loan balances (at around $484,000 or below) lessened to 4.41 percent, from 4.42 percent.
Additionally, prior to the beginning of the week, mortgage rates decreased, as a U.S.-China trade war brought on some fears. Rates could go lower, especially if the stock market continues to sell-off, as investors try and transfer to a safer bond market.
Derek Lebert is a CPA and entrepreneur. Derek has worked in various senior roles in finance.