Will the entry-level real estate market stay strong through the holiday season? (Photo: iStockphoto)
Home purchase loans saw a spike last week, climbing a seasonally adjusted 9.6 percent compared to the previous week according to the Mortgage Bankers Association’s weekly survey. Overall, mortgage applications fell, but most of the drop was in refinancing.
Mortgage interest rates were relatively flat from the previous week with the 30-year fixed-rate mortgage at 4.82 percent (4.83 percent the previous week) and the 1-year Adjustable Rate Mortgage was 6.66 percent (6.85). The 15-year fixed-rate mortgage was unchanged at 4.32 percent.
A $100,000 loan at the 30-year rate equates to a $525.87 monthly payment. The payment would be $755.83 for a 15-year loan at last week’s rate. Rates are based on a 20 percent down payment. The average points paid on a 30-year loan was 1.19 and it was 1.05 on a 15-year loan.
The good news was that home purchase loans increased after dropping a seasonally adjusted 7.9 percent two weeks ago, marking two consecutive weeks that purchase loans fell. The big drop was likely attributable to the end of the first-time homebuyers tax credit on Nov. 30. Buyers would have had to be in escrow at least 30 days before the end of the program to close in time.
The tax credit was extended to April 30, 2010 and expanded to include those who have lived in their home the past five years. But there was a lag time as homebuyers waited to see if the credit would be extended.
It will be interesting to see if the entry-level market continues its strong showing as we enter the traditional holiday slow-down. It’s likely that home purchase loans will continue to climb as a percentage of the market because most of those who want to refinance have probably done so with rates pretty much at the bottom. Still, refinances were 71.7 percent of last week’s mortgage market.—Rick Hazeltine