Contrast Shown As Mortgage Applications Soar To 9.3%

In a jobs report for May, interest rates plummeted but mortgages were on the increase.

According to the Mortgage Bankers Association, mortgage applications soared to 9.3 percent in the recent few weeks. The results were adjusted from time to time, including the Memorial Day holiday. The increase may be a means to cover the huge decline weeks ago or in response to the slight decline in interest rates.

Home loan applications took a swing up by 7 percent, seasonally adjusted and are almost 14 percent higher than a year ago. Interest rates could be said to have been higher this same time last year. There has also been a 12% increase in mortgage applications to buy homes for a week. However, there has been a 19% decrease within the past month and 6% from the same week in 2015. Considering the high demand for housing, applications are expected to be higher, but sales are slow due to the high prices of homes.

Mike Fratantoni, chief economist of the MBA said “Given the weak employment report for May, we think it is unlikely that the Fed will raise rates in June.”

“However, as other economic data are pointing to continued economic growth, we do expect that they will increase rates following their July meeting,” he added.

Now would’ve been a great time to buy a house, but folks who thought so are often discouraged as the net share of Canadians who say so has dropped to 29% in May as reported by mortgage giant, Fannie Mae.

Doug Duncan, senior vice president and chief economist at Fannie Mae said: “Continued home price appreciation has been squeezing housing affordability, driving a two-year downward trend in the share of consumers who think it’s a good time to buy a home.”

“The current low mortgage rate environment has helped ease this pressure, and fewer than half of consumers expect rates to go up in the next year. While the May increase in income growth perceptions could provide further support to prospective homebuyers as the spring/summer home buying season gains momentum, the effect may be muted by May’s discouraging jobs report.” he added.

A 0.1% conforming loan balances ($417,000 or less) decrease was witnessed regarding the interest rate for 30-year fixed-rate mortgages. It dropped from 3.8% to 3.83%.

“When rates have been near these three-year lows, we’ve only seen them dip lower briefly — and usually not by that much. That means locking is never a bad idea at current levels,” said Matthew Graham, chief operating officer of Mortgage News Daily.

“Even so, risk-takers could also find justification to float based on the hope that European markets continue to pull US interest rates lower as the European Central Bank (ECB) begins a new bond-buying program tomorrow.” he added.