Reports Show Mortgage Applications Increase to Second Highest Point Since 2010

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Need some good news from the housing market as we approach Spring, the choice homebuying season? The weekly report from the Mortgage Bankers Association, reflecting the week that ended on April 8, has nothing but good news. How good? Try “second highest level since May 2010” level good.

Let Mike Fratantoni, the chief economist at MBA, sum it up:

“Helped by a persistently strong job market and low rates, applications for both conventional and government home purchase loans increased last week,” he said, to go with the release of the report. “The purchase index was at its second highest level since May 2010. Applications to refinance also increased as the 30-year contract rate decreased to its lowest level since January 2015.”

If that wasn’t interesting enough news for you, it should also be noted that the gains were increased more equally across between both purchase and refinance applications. The report indicated that the Refinance Index was up 11 percent (increasing upon an 8 percent increase the previous week), settling at its highest level since February. The Purchase Index was up a similar degree, showing an 8 percent increase this week, reaching its highest plateau since October of last year. Even more impressively, the final tally was 24 percent higher than the same timeframe during 2015.

Overall, applications as a whole were up 10 percent from the last week, both when seasonally adjusted and unadjusted.  

The chunk of mortgage applications that were backed by government institutions generally fell during the week. FHA-backed mortgages were down half a percentage point to 10.8 percent while VA-backed mortgages fell from 12.2 percent to 11.9 percent. USDA-backed mortgages stayed the same, at a 0.8 percent share.

Rates were also down, in general. Thirty-year fixed rate mortgages backed by the FHA featured an average rate of 3.66 percent, which is the lowest average in a little over a year. Last week’s average rate was 3.73 percent. The average interest rate for 15-year fixed rate mortgages remained the same, at 3.1 percent.

Expectations remain that eventually the interest rates will rise. Recent remarks from Janet Yellen, chair of the Federal Reserve, suggest that the increase will be slow in coming. She confirmed this train of thought during a speech to the Economics Club of New York.

“Given the risks to the outlook, I consider it appropriate for the [central bank] to proceed cautiously in adjusting policy,” she said, addressing the Fed’s goals of bringing the inflation rate to 2 percent. “My baseline assumption of stable expectation is still justified…Nevertheless, the decline in some indicators has heightened the risk that this judgment could be wrong.”

Americans may or may not take Yellen’s commentary into consideration when deciding whether to shop for a home, but this week’s report from the Mortgage Bankers Association suggests that they might.