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Mortgage rates down, new mortgage applications up

As mortgage interest rates fall, buyers are entering the market, despite difficulties in qualifying. Housing is showing signs of stabilization, but a full recovery is still quite far away.

Mortgage rates fall

According to the Freddie Mac Weekly Primary Mortgage Market Survey (PMMS), mortgage interest rates fell across the board from the week prior. Freddie Mac reports the average 30-year fixed rate mortgage (FRM) is at 3.56 percent this week (down from 3.62 percent last week), a 15-year fixed rate mortgage fell to 2.86 percent (down from 2.89 percent last week), a 5/1adjustible rate mortgage (ARM) hit 2.74 percent (down from 2.79 percent the previous week).

Nationally, rates have continued falling, with the PMMS for one year ago revealing interest rates at 4.51 percent for a 30-year FRM, which was considered low, and 3.65 percent on a 15-year FRM. As the real estate economy shows signs of stabilization, low interest rates will continue to be one of the few boosts to the sector.

Fees and points are nearly the same as the week prior. The 30-year FRMs are at 0.7, down from 0.8 last week, while 15-year FRMs remained at 0.7 this week, and 5/1 ARMs remained at 0.6.

Regional rates varied, with the West region averaging 3.53 percent on a 30-year FRM, the lowest in the nation, while 15-year FRMs saw the best rates in the Southwest region at 2.84, also below the national average.

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Mortgage application volume rises, refinance volume falls

Combining new mortgage purchase applications and refinance applications, mortgage application volume decreased 2.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 6, 2012. This week’s results include an adjustment for the Fourth of July holiday.

The Refinance Index fell 3.0 percent from the previous week while the Purchase Index rose 3.0 percent from the week prior, and is 3.0 percent lower than the same week in 2011. The refinance share of mortgage activity fell to 77.0 percent of total applications from the week prior.

The MBA reports that the average loan size of all loans for home purchase in the US was $240,897 in June, down from $243,733 in May 2012. The average loan size for a refinance was $218,619, down from $226,576 in May. The largest purchase loans were made in the Pacific region at $ 361,788. The largest refinance loans were also made in the Pacific region at $ 310,977.

According to the MBA’s survey, which varies slightly from Freddie Mac’s:

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.79 percent, the lowest rate in the history of the survey, from 3.86 percent, with points decreasing to 0.36 from 0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. 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 4.05 percent, the lowest rate in the history of the survey, from 4.08 percent, with points decreasing to 0.34 from 0.38 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.63 percent, the lowest rate in the history of the survey, from 3.69 percent, with points decreasing to 0.36 from 0.50 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.15 percent, the lowest rate in the history of the survey, from 3.20 percent, with points decreasing to 0.43 from 0.47 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 5/1 ARMs decreased to 2.71 percent, the lowest rate in the history of the survey, from 2.76 percent, with points decreasing to 0.36 from 0.45 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

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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.

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