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.

Government-Backed 4% Fixed-Rate Mortgages?

From CNNMoney.com - "Obama pledges mortgage help":

Republicans, who opposed the president's stimulus package of over $800 billion largely because of its spending priorities, suggested mortgage help as well, proposing government-backed 4% fixed-rate mortgages for "any credit-worthy borrower," Senate Republican Leader Mitch McConnell said.

"The availability of these low-interest loans would increase demand for houses significantly and low-interest mortgages would boost household income," McConnell said in a separate radio address.

I'm not going to dissect the entire article, but I did want to bring attention to this one small excerpt (politics aside) discussing the ongoing possibility of the government clearing the way for extremely cheap government-backed mortgages. Even though this will not impact lending standards, it will continue to make owning a home cheaper without sellers actually having to reduce the price of the home (helping to shore future price erosion). If this ever gets past mere discussion and is ultimately enacted, this will also go a long ways towards motivating wannabe buyers sitting on the fence and bring urgency to buyers who are actively searching (helping to move inventory).