Mortgage Applications on the Rise
The Mortgage Bankers Association has released reports showing total mortgage application volume has risen 5.3 percent week-to-week on a seasonally-adjusted basis. A surge of applications to purchase a home preempted the rise, as purchase applications jumped nine percent to their highest level since January.
“A sizeable increase in purchase applications last week likely reflected the impact of somewhat lower mortgage rates as well as continued growth in the job market, as confirmed by Friday’s employment report from the Bureau of Labor Statistics,” noted Mike Fratantoni, MBA’s Chief Economist to CNBC News. “Despite the strong increase in the purchase market last week, volume continues to run 16 percent behind last year’s pace.”
Purchase applications represented 51 percent of total mortgage applications, as interest rates for 30-year fixed-rate mortgages decreased to 4.43 percent, the lowest rates since November of last year.
The spring home buying season is off to a much slower start than industry experts had anticipated, as rising prices and higher rates have made affordability a problem for first-time buyers. Many property owners considering a change are reluctant to list their properties for sale, and it is estimated that roughly a third of homeowners owe more on their mortgage that they recoup from a sale.
While the boost in purchase applications is largely a positive sign, the market is still far underperforming normal levels. A report by Inside Mortgage Finance has found that approximately 35 percent of all mortgage firms will either shut down, sell, or merge in the next year.
Lenders can protect themselves against risky lending practices by investing in application processing software. With effective credit application processing, lenders can streamline the origination process and secure the data needed to process applications in a manner that is consistent and cost-effective.