The housing recovery is heavily dependent on low interest rates induced by the Federal Reserve, but mortgage applications continue to slowly grind higher.
According to the Mortgage Bankers Association’s latest report for the week ending April 19, loan application volume edged 0.2 percent higher on a seasonally adjusted basis from one week earlier. This comes after a 4.8 percent increase. These figures include both refinancing and home purchase demand, and covers over 75 percent of all domestic retail residential mortgage applications.
The industry group’s Refinance Index increased 0.3 percent from the previous week. The Purchase Index also gained 0.3 percent to reach its highest level since May 2010. On an unadjusted basis, the Purchase Index still increased 1.0 percent, which is 18.0 percent higher than the same week one year ago.
Overall, the refinance share of mortgage activity remained unchanged at 75 percent of total applications. The refinance share declined for ten straight weeks earlier this year, and is slightly above its lowest level since May 2012.
Interest rates edge lower…
The average interest rate for a 30-year fixed-rate mortgage came in at 3.65 percent, down slightly from 3.67 percent in the prior week. In comparison, the week ending March 15 posted the highest contract rate since August 2012 at 3.82 percent. The most recent average rate for a 15-year fixed-rate mortgage decreased from 2.91 percent to 2.89 percent.
The MBA report is the latest sign that the housing recovery is still in progress. Earlier in the week, the Commerce Department reported that purchases on new homes, measured by contracts signed, increased 1.5 percent to a seasonally adjusted 417,000-unit annual pace last month, compared to the revised February rate of 411,000 units. Home sales were up 18.5 percent compared to March 2012.
In morning trading, home-builder names such as D.R. Horton (NYSE:DHI) and Lennar (NYSE:LEN) gained more than 1.0 percent, while home-improvement companies such as Lowes (NYSE:L) and Home Depot (NYSE:HD) traded relatively flat.