Mortgage Applications Move Higher

From CNNMoney.com - "Mortgage applications rise":

U.S. mortgage applications rose in the last week of January, reflecting a jump in demand for home refinancing loans even as interest rates rose to their highest levels since early December, data from an industry group showed Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended Jan. 30 increased 8.6% to 795.4 after slumping 38.8% during the previous week.

Inside the MBA's purchase and refinance index:

The MBA's seasonally adjusted purchase index fell 11.2% to 261.4 in the latest week. The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was down 9.2%.

The Mortgage Bankers seasonally adjusted index of refinancing applications, meanwhile, jumped 15.8% to 3,906.3.

Inside the mortgage rates:

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.28%, up 0.06 percentage point from the previous week. Three weeks earlier, mortgage rates were 4.89%, the lowest level recorded since the MBA survey began in 1990.

...

The adjustable-rate mortgage share of activity decreased to 2.1% in the latest week, down from 2.4% the previous week.

Fixed 15-year mortgage rates averaged 5.15%, up from 4.98% the previous week. Rates on one-year ARMs increased to 6.09% from 5.96%.

The long and the short is that mortgage rates have been inching up but still remain incredibly cheap.

Mortgage Applications Tank

From CNNMoney.com - "Mortgage applications plunge":

Applications for U.S. home mortgages cratered to levels not seen since November last week as rates held stubbornly above record lows engineered by the Federal Reserve earlier this month, according to data from an industry group on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity plunged by 38.8% to 732.1 in the week ended Jan. 23.

Fixed 30-year mortgage rates averaged 5.22% in the week, down from 5.24% the previous week and 4.89% in early January, the MBA said.

The culprit:

Rising U.S. government borrowing to pay for financial bailouts and expected stimulus to stave off recession have begun to increase Treasury yields, offsetting Fed efforts to drive mortgage rates lower, analysts said. Benchmark 10-year Treasury yields, which help govern mortgage rates, have climbed nearly a half-percentage point since late December to 2.53% (up to 2.66% as of writing this post).

Refinances:

The MBA's seasonally adjusted index of refinancing applications plummeted 48% to 3,373.9 last week. The gauge of loan requests for home purchases declined 2.9% to 294.3.

The mortgage application numbers continue to be all over the board in recent reports - up and down. Even though mortgage rates have been trending higher, they're STILL CHEAP!

Mortgage Applications Dip

From Reuters.com - "Mortgage applications dipped before Fed move: MBA":

Applications for U.S. residential mortgages slipped from lofty levels last week as homeowners slowed refinancings ahead of expected federal action to lower housing costs, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity fell for the first week in four, dropping 8.2 percent to 1,143.8 in the week ended January 2. A week earlier, it hit a five-year high.

A potential cause (not quite so sure the average borrower is this informed):

Borrowers may have slowed applications in anticipation of the Federal Reserve's program to purchase up to $500 billion in mortgage-backed securities, which is aimed at lowering rates lenders charge to consumers, an MBA economist said. The Fed began its purchases on Monday, fueling a sharp drop in premiums that investors demand to own the bonds, and by extension, a probable drop in mortgage rates this week, analysts said.

What are the rates doing?

Fixed 30-year mortgage rates averaged 5.07 percent in the week, up from 5.03 percent the prior week, according to the MBA's survey. The rate has plunged from 6.47 percent at the end of October, mostly after the Fed announced its intentions.

The usual foolishness, not looking at the big picture. Gotta get a 4.5% interest rate. 5.0% rates are not good enough. This notion is fine as long as something unexpected doesn't drive those rates higher. Obviously not expected but, when you have 5.0% money, you should be shouting from the rooftops with glee. In the Real Estate business, you don't need to hit home runs, preventing major mistakes is far more important:

"With all the talk the Fed is buying (MBS), rates could drop further and (borrowers) may say, 'Why not wait a little more'" before refinancing, said Orawin Velz, associate vice president of economic forecasting at the MBA.

Where we should be headed with rates and its impact on housing (no guarantees):

Average 30-year fixed rates are headed toward, or below, 4.75 percent, compared with 5.1 percent in a recent Freddie Mac survey, Tony Crescenzi, chief bond market strategist at Miller Tabak & Co., said in a client note on Tuesday.

The plan to lower mortgage rates is seen as one of the most promising federal plans to stabilize the housing market, which is in its worst downturn since the 1930s. But because lending standards have tightened across the industry, many troubled borrowers will not be helped no matter how low the rate.

Mortgage Applications Hold Steady

From CNNMoney.com - "Mortgage applications unchanged at 5-year peak":

Demand for U.S. mortgage applications was unchanged during the Christmas holiday week, holding the highest levels in more than five years with loan rates near record lows, an industry group said on Wednesday.

Borrowing costs have tumbled more than 1-1/2 percentage points from summer peaks and are widely expected to slide further as the government steps in to stabilize the worst housing market since the Great Depression.

The Mortgage Bankers Association's seasonally adjusted index of mortgage application activity was unchanged last week at 1,245.7, matching the highest level since July 2003 set the previous week.

The skinny:

Fast-falling mortgage rates are driving demand, particularly for refinancing.

Fixed 30-year home loan rates averaged 5.03 percent last week, marginally lower than 5.04 percent a week earlier but well below the 6.59 percent summer peak in July, according to the Mortgage Bankers Association.

Last week's rate was the lowest since June 2003, the trade group said.

These cheap mortgage rates are great but:

The government interventions "can drive down primary mortgage rates and make getting loans much more affordable, make a borrower's monthly payments lower -- if they can qualify," he said on Tuesday.

Let me also add that these cheap mortgage rates mean nothing to someone who wants to refinance, is credit worthy, but their home no longer appraises since values have dropped so dramatically. Unfortunately, thousands of people fall into both categories. Either no longer credit worthy or credit worthy with a house underwater. Regardless of what bucket most people find themselves trapped in, these times benefit the usual suspects, the ones who need the least amount of help.

All in all, the present status of many housing markets look bad, but there are many underlying aspects that are subtly working towards repairing this housing mess. Mortgage rates are down significantly, (like it or not) the government is throwing unbelievable amounts of money at the problem and some of it will stick, sales numbers and inventory levels in the West seem to be showing signs of some stabilization, values have dropped dramatically in many locales (and have been doing so since July / August of 2005 in some CA markets). Despite the healing that is trying to take place, our current economic stresses and foreclosure madness are making it nearly impossible for these markets to improve because of absurd inventory levels, continued affordability issues, and lack of available credit for most.

Merely stating the obvious, housing values need to stop dropping, people need to be able to comfortably pay their mortgages, and inventory needs to melt away. Until then, the pain will remain and home values will continue to drop as the ultimate equalizer to affordability. Unbelievable opportunities will abound for those who see opportunity where everyone else sees risk and remains paralyzed by fear.

Report Shows Mortgage Apps Rise 5.1% Last Week

Lower interest rates in the beginning of the week looks to have initially spurred activity and refinance applicants while volatility and rising rates towards the end of the week brought the activity back to lower levels:

"'Treasury yields were extremely volatile last week,' said Orawin Velz, MBA's associate vice president of economic forecasting, in a news release. "The yield on the 10-year Treasury note -- the benchmark for the 30-year fixed mortgage rate -- moved up about 40 basis points over the course of the week.

'Lower yields earlier in the week appeared to have spurred refinance activity, which then faded as the week went on and rates began to rise.'

Overall, applications volume slumped 17% for the week ended Oct. 10 from the same week in 2007, the MBA said." - (MarketWatch)

Inside the mortgage numbers:

"The four-week moving average for all mortgages was down 7.9%, the MBA's latest survey showed. It covers about one half of all U.S. retail residential mortgage applications

Refinancings made up 46.4% of all mortgage applications filed last week, up from 43.4% the week before. Adjustable-rate mortgages also rose, accounting for 2.6% of all applications, up from 2.3%.

The rate charged on 30-year fixed-rate mortgages averaged 6.47% last week, up from 5.99% the week before, while 15-year fixed-rate mortgages had an average rate of 6.17% last week, up from 5.71%.

The rate on one-year ARMs averaged 6.67% last week, up from 6.60% the previous week." - (MarketWatch)