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Mortgage application volume dips despite rock bottom interest rates

Last week, mortgage application volume made healthy gains for the first time in several weeks, but volume again slipped this week despite continued low interest rates. Meanwhile government agencies fight over principal reductions and banks begin paying out on the $25 billion mortgage settlement.

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Mortgage application volume down again

After six weeks of decreasing mortgage application volume for new purchases and refinances, last week saw a slight uptick which has been tamped down by this week’s report from the Mortgage Banker’s Association (MBA) who says applications fell 2.4 percent last week from the week prior.

The MBA notes that there were no adjustments made for Good Friday and that the four week moving average for the seasonally adjusted Market Index is down 2.08 percent. The four week moving average is up 2.19 percent for the seasonally adjusted Purchase Index, while this average is down 3.45 percent for the Refinance Index.

Breakdown of volume share

For the eight week in a row, refinance volume dropped, resting at 70.5 percent of the total applications, the lowest share since July 2011. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 5.5 percent of total applications from the previous week.

In March 2012, the share of applications for investment properties rose from 7.4 percent in february to 8.3 percent, which the MBA says was driven by refinance applications for investment homes falling for the month.

Interest rates

According to the MBA:

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 4.10 percent from 4.16 percent, with points remaining unchanged at 0.43 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. This is the lowest 30-year fixed rate since March 9, 2012. The effective rate decreased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 4.43 percent from 4.46 percent, with points decreasing to 0.36 from 0.49 (including the origination fee) for 80 percent LTV loans. This is the lowest 30-year jumbo rate since March 9, 2012. The effective rate decreased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.87 percent from 3.89 percent, with points decreasing to 0.55 from 0.58 (including the origination fee) for 80 percent LTV loans. This is the lowest FHA rate since March 9, 2012. The effective rate decreased from last week.
  • The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.37 percent from 3.40 percent, with points decreasing to 0.37 from 0.41 (including the origination fee) for 80 percent LTV loans. This is the lowest 15-year fixed rate since March 9, 2012. The effective rate decreased from last week.
  • The average contract interest rate for 5/1 ARMs decreased to 2.89 percent from 2.93 percent, with points increasing to 0.38 from 0.35 (including the origination fee) for 80 percent LTV loans. This is the lowest 5/1 ARM rate since March 9, 2012. The effective rate decreased from last week.

Timing coincides with principal reduction talks

As housing leaders continue to argue over whether or not banks should give mortgage debt forgiveness, mortgage application volume has fallen in recent weeks. Some project that mortgage activity will increase as they traditionally do during the spring, but as lending remains tight and the big servicers readjust to paying $25 billion per terms of the national settlement with federal and state agencies, with some lenders like Ally pulling out of mortgages altogether.

The MBA is not offering any predictions this week, but the reduced volume of mortgage applications and refinances is troubling as real estate sales and housing prices continue to slip.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

Austin

Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?

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Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

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Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.

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aging housing inventory

The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

Click here to continue reading this story…

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Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.

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zillow move

Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.

2. Two major media brands emerge

Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.

…Click here to continue reading this story…

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