Mortgage rates drop, but loan applications plunge

Freddie Mac reported yesterday that the 30-year fixed-rate mortgage (FRM) fell to a five-week low this week, 4.91 percent, down from 4.98 percent last week.  Last year at this time, it was 6.14 percent.

The 15-year FRM this week averaged 4.36 percent versus the prior weeks’ 4.40 percent and last year’s 5.81 percent.

Fixed-Rate Mortgages
30-Year Fees& Points 15-Year Fees& Points
US 4.91 0.7 4.36 0.6
Northeast 4.92 0.7 4.37 0.6
Southeast 4.92 0.6 4.35 0.6
N. Central 4.96 0.6 4.38 0.6
Southwest 4.90 0.5 4.37 0.5
West 4.88 0.8 4.35 0.7

Meantime, the Mortgage Bankers Association says refinancings pushed up loan applications for the week ending Nov. 6 by 3.2 percent on a seasonally adjusted basis from one week earlier, but purchase volume fell by 11.7 percent to a nine-year low.  On an unadjusted basis, total activity increased 2.8 percent compared with the previous week.

Refinancing volume went up 11.3 percent from the previous week. Unadjusted, purchase applications plunged 13.7 percent; compared with the same week a year earlier, the decline was 21.6 percent.

Unquestionably, there was a rush to apply for purchase loans as the deadline–now extended–of Nov. 30 approached for receiving the federal government’s tax credit for first-time home buyers. So, the drop in volume was hardly unexpected.

The refinance share of mortgage activity increased to 71.5 percent of total applications from 66.1 percent the previous week, the highest share since May, when the 30-year fixed-rate mortgage rate was around 4.7 percent.

The adjustable-rate mortgage (ARM) share fell to 5.5 percent from 6.1 percent.

As for loan rates, the five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) slipped to 4.29 percent from 4.35 percent. A year ago, it averaged 5.98 percent.

The one-year Treasury-indexed ARM was 4.46 percent, down from4.47 percent last week and 5.33 percent last year.

Said Freddie Mac Chief Economist Frank Nothaft:

Mortgage rates eased further over the week, helping to promote an affordable home-purchase market and stimulate refinance. This comes at a time when house price declines are moderating and consumer demand for prime mortgages at commercial banks has picked up.”

I always hate to sound like a real estate cheerleader, and I haven’t always said that it’s a good time to buy. Based on all the information in my blog and e-newsletter, I’m saying it now.  When, after all, will it be a better time?

With lending rates so low and price declines leveling off, the danger of waiting longer is a sturdy stool with three legs: The indeterminate possibility of rates climbing; the likelihood that prices won’t fall much more and that, when the bottom is perceived, they’ll actually rise with competition from other buyers; and the cost, for first-timers, of throwing money down the toilet for rent.

Moreover, the psychic cost of prolonging a change in lifestyle can be a heavy burden.

If the welcome spike in my business is any indication, many buyers already recognize that now is when they have to act.

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Malcolm Carter
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022

M: 347-886-0248
F: 347-438-3201
Web site

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