The Primary Mortgage Market Is Experiencing A Refinancing Boom

According to the Mortgage Bankers Association, which publishes Weekly Mortgage Application Surveys, the mortgage loan demand rose 1.1 percent after seasonally adjusted while the purchase index also seasonally adjusted increased 1.5 percent during the week ending May 20, 2011. When not adjusted for season, the mortgage application demand increased 0.9 percent compared to the week ending in May 13, 2011. view home loan rates offered by Ditech here.

More consumers are choosing to refinance as well; the percentage increased 0.9 percent compared to the week ending on the 13th. These are the highest numbers since December of 2010. For a four week period it is up 7.1 percent. As a result, the refinance portion of the mortgage market increased 66.8 percent of the total demand for mortgages. The week before was 66.7% of total demand. The refinance segment is at the highest level for a long time.

The Purchase Index for mortgages also increased. Adjusted for season, it ticked up 1.5 percent over the previous week while unadjusted Purchase Index went up 0.8 percent. The number is actually 3.1 percent higher than the same period last year.

Interest rates have also changed quite a bit, let’s examine the changes. The 30-year rate moved to 4.69 percent from 4.60 percent while the 15 year rate crept up to 3.78 percent from 3.75 percent. Points decreased to 0.69 from 0.93 for thirty year fixed and decreased to 1.04 from 1.22 for 80 percent LTV loans.

So, regardless that rates ticked higher somewhat, they are still at six month lows. This seems to follow early predictions about 2011. On the other hand, the demand for loans have not increased as expected.

The numbers clearly show that refinancing is extremely popular at the moment. It looks as if all the activity is in the primary market and not the secondary market. Plus many people missed out on the low rates and are eager not to make the same mistake again.

The new mortgage reforms will also have a significant impact on the housing market because many prospective homeowners will not be able to meet the stringent income to mortgage payment ratio of 28% and heftier down payments. As a result we will see more renters.

Single home families sales increased quite significantly; up by seven percent to be exact. Record numbers were reached in April with 323,000 homes sold in total. This is higher than what most experts predicted; analysts expected the numbers to fall around 300,000.

All states saw an increase in home sales as a whole. However, there was a 23% decline in annual rate sales over all when compared to April of last year. Around 420,000 homes were sold last year. Average selling price for a home was $217,900 which is up from $208,300 from the same period last year. The average sales price was $268,900.

Three quarters of families who purchased a home had an average family income. Analysts say that 74.6 percent of all homes sold in the country were affordable to a family with an income of $64,400. These numbers are the highest since the 1990′s and it means that more Americans than ever can afford to purchase. It also marks the ninth quarter in a row in which the affordable home price bettered 70 percent. Usually these numbers do not even reach sixty five percent. Part of the reason for this increase is low interest rates.

Mortgage regulations are stricter now when it comes to putting down a substantial down payment plus the income requirements are stricter now. As a result, less families qualify for a loan. In addition, buyers appear to be holding back expecting home prices will decline. The most expensive states to purchase include New York and New Jersey. Other areas with high home prices include Orange County and San Diego.

View mortgage calculators in order to use our calculator tools