The housing recovery is heavily dependent on low interest rates induced by the Federal Reserve, but mortgage applications continue to climb higher.
According to the Mortgage Bankers Association’s latest report for the week ending April 26, loan application volume increased 1.8 percent higher on a seasonally adjusted basis from one week earlier. This comes after a 0.2 percent increase. These figures include both refinancing and home purchase demand, and cover over 75 percent of all domestic retail residential mortgage applications.
The industry group’s Refinance Index increased 3 percent from the previous week and is at its highest level since the week ending January 18, 2013. The Purchase Index decreased 1.4 percent. On an unadjusted basis, the Purchase Index dipped 0.5 percent, but is 13 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.
The average interest rate for a 30-year fixed-rate mortgage came in at 3.60 percent, down from 3.65 percent in the prior week. It is the lowest rate since December 2012. 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 2.89 percent to 2.84 percent.
The MBA report is the latest sign that the housing recovery is still in progress. Earlier this week, the Standard & Poor’s/Case-Shiller Home Price Indices showed average home prices increased 8.6 percent and 9.3 percent for the 10- and 20-City Composites, respectively, in the 12 months ending in February 2013.
In morning trading, home-builder names such as D.R. Horton (NYSE:DHI) and Lennar (NYSE:LEN) both declined more than 1 percent. Home-improvement companies such as Home Depot (NYSE:HD) and Lowes (NYSE:L) traded mostly flat.
Here’s how the market traded Wednesday:
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