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 applications.
- Applications to purchase homes perked up over the last week following the end of the government shutdown and debt ceiling showdown, according to data released this morning by the Mortgage Bankers Association. While the headline figure fell 0.6%, the purchase component rose 0.7%, ending a 3-week decline. The sharp decline came despite a 25 bp decline in the average rate on a 30-year fixed mortgage over this period. The average rate did rise by roughly 15 bp in the days immediately leading up to the debt ceiling deadline, though.
- In a bit of a surprise, conventional purchase mortgage applications declined an additional 1.7%, while the government portion of the index bounced back by a robust 7.1%. The USDA was shuttered during the government shutdown and the FHA was working with a skeleton crew. The increase in the government component nearly offset the prior week’s decline.
- With the end of the government shutdown and debt ceiling crisis, the short-lived slide in the housing market appears to have stabilized. The IRS, FHA, and USDA may have a backlog of work in the near term in order to catch up with information requests and applications, but these “lost” sales will likely be recovered in the weeks and months ahead. However, the resolution to the shutdown and debt debate only pushed the deadlines to mid-January and mid-February, respectively, which a chance for discussion in between suggesting that we could experience this process all over again in a few months. Mortgage rates rose during the days leading up to the debt ceiling limit, but have since eased further than levels prior to the crisis indicating that average rates could move lower in next week’s reading from Freddie Mac.