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 May 3, loan application volume jumped 7 percent higher on a seasonally adjusted basis from one week earlier. This comes after a 1.8 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 8 percent from the previous week and is at its highest level since December 2012. The Purchase Index increased 2 percent to reach its highest level since May 2010. On an unadjusted basis, the Purchase Index gained 3 percent, and is 12 percent higher than the same week one year ago.
Overall, the refinance share of mortgage activity edged higher from 75 percent to 76 percent of total applications. The refinance share declined for ten straight weeks earlier this year, but currently stands at its highest percentage in about three months.
The average interest rate for a 30-year fixed-rate mortgage came in at 3.59 percent, down slightly from 3.60 percent in the prior week. This 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 2.84 percent to 2.81 percent, the lowest in the history of the survey.
The MBA report is the latest sign that the housing recovery is still in progress. Earlier this week, CoreLogic reported that home prices increased 10.5 percent year-over-year in March. It was the 13th consecutive gain in home prices and the biggest year-over-year jump since 2006.
In morning trading, home-builder names such as D.R. Horton (NYSE:DHI) and PulteGroup (NYSE:PHM) edged slightly lower. Shares of Home Depot (NYSE:HD) traded flat, while Lowes (NYSE:L) fell 0.50 percent.
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