ShareThis blog post was written by La Shawn Skeete. La Shawn is a Summer Research Intern and is currently studying at The University of Maryland, College Park pursuing a degree in economics.
- Seasonally adjusted mortgage applications increased 8.4% from the week ending May 29th and 3.5% from this time in 2014. Applications for purchases increased 9.7% over the last week and 14.3% over the last year, reflecting a positive trend in purchases. Changes from last week also reflect buyers returning from Memorial Day vacation.
- The year-over-year trend in purchase applications tracks NAR’s measure of buyer traffic which increased 9.5% over the past month.
- Seasonally adjusted refinance applications are up 7.0% from last week but down 4.8% from this time last year. However, government applications for refinance are up 28.4% from last year versus an 11.5% fall in conventional refinance applications from last year to this year. The strength in government applications likely reflects the sharp 50 basis point reduction in fees charged by the FHA. Refinance applications tend to rise immediately after an increase in mortgage rate before tapering off.
- The average rate for a 30-year fixed rate mortgage was at 4.17% this week, 15 basis points higher than last week, but it is not expected to deter buyers as purchase applications still show healthy growth.
- Job growth and economic confidence are significant drivers of increased housing demand.
- Low inventory and builders suffering locally to find financing to meet increasing demand are factors in rising home prices. The median home price rose 0.5% in May.
Mortgage application data serve as a leading indicator for homes sales and other home related expenditures such as appliances and furniture.