In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses mortgage purchase applications.
- Last week's good gain in mortgage applications for home purchase were all erased in the latest week's data. But refinance activity kicked higher, particularly into FHA loans as more underwater homeowners took advantage of the streamlined lower-fee program.
- Applications for home purchase fell nine percent while applications for refinances rose one percent.
- Please be mindful that mortgage data has not been a good predictor of home sales in the past 18 months because a sizable portion of purchases are completed all-cash without a mortgage. Also note that application data has no information on actual approval rates, which could be rising.
- Furthermore, very low interest rates mean banks have shifted resources to refinances and away from home purchases. Only after interest rates rise a bit higher and refinances slow will banks shift resources to home purchase mortgages.
- Despite no meaningful pick up in mortgage applications for home purchase, most markets across the country have been reporting higher home sales as compared to one year ago.