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Mortgage Apps Rise, Refinance Boom Good for Bankers
Applications for mortgages in the United States rose for three weeks in a row riding on a wave of optimism spawned by the drop in the prime rate. The thirty year fixed loan interest rate dropped to a record low for the year, and this spawned a flurry of refinancing activity.
The Mortgage Bankers Association compiles an index of mortgage applications for purchase or refinance, which skyrocketed to more than eleven hundred and fifty for the third week of March, up from eight hundred the prior week.
Economists agree that the lower mortgage rates stimulate demand, but there still remains a fear that sales will continue to slump for the next few months. Property values continue to be trimmed, and depressed even, due to continuing foreclosures and declining job markets.
The MBA also released figures comprising a purchase index, which for the week ending March 21, increased to over 267 up from a 257 the prior week. Another reference, the refinance gauge jumped an incredible fifty percent from the same week to week time frame. The relationship between refinance loans to total loan applications last week is seventy eight and a half percent, up from the prior weeks mere seventy three percent.
The incredible fact is that the average rate on a thirty year fixed rate loan is now at an all time low since the MBA began keeping records in early 1990, 4.65 percent, almost a quarter percent down from the week before. Some ballpark figures that easily illustrate the reality in savings that can be realized by financing at these terms are such: a loan amount of one hundred thousand can save almost seventy dollars a month over the same amount at the rate merely one week previous to the current rate for this week.
Some of the MBA's predictions for the coming year include increasing the numbers for the mortgage industry's total value in US dollars for loan origination in 2009 to the tune of 2.75 billion dollars. The banker's association is based in Washington DC and surveys half of the US residential loan originations.
The Federal Housing Finance Agency said although prices for houses still declined in February, it is however the smallest drop in the last five months. This news was released on the heels of the Fed's announcement earlier this March about their intent to free up the banking credit by purchasing mortgage backed securities by the amount of 1.25 trillion dollars, for 2009.
Marin Real Estate Blog
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