Mortgage applications increase
According to the Mortgage Bankers Association (MBA), mortgage applications rose 1.3 percent last week, including both home purchase applications and refinance applications, seasonally adjusted. This follows a dip of 0.4 percent the week prior, and weeks of mostly decline in previous weeks as mortgage interest rates increase, slowing the pace of applications.
Last week’s activity boost was led primarily by refinance activity which rose 2.5 percent, a welcome sign after recently plummeting to the lowest level in over four years, now hitting its highest point since August, a marked improvement.
Rates and an ongoing shutdown showdown
The MBA’s report this morning is released as the federal government shutdown has dominated headlines, which has not negatively impacted application volume. Yet. Many economists are vocal with their fears that continued headbutting in Congress and the White House could hamper the economic recovery, particularly housing.
According to the MBA, 30-year mortgage rates fell 7 basis points to 4.42 percent, after hitting the year’s highest point of 4.8 in September.
Why economists are becoming uneasy
This week, LPS reported that mortgage delinquency rates have improved dramatically, with 6.20 percent of mortgages were delinquent in August, falling from 6.41 percent in July, a substantial improvement in a short period. Additionally, 2.66 percent of mortgages were in the foreclosure process, falling from 4.04 percent in August 2012.
Meanwhile, Trulia indices indicate a slowdown in the housing recovery, as asking prices rose 2.0 percent in September compared to August, but reporting a quarter-over-quarter price gain of only 3.0 percent was the lowest quarterly increase since February. Prices actually fell quarter-over-quarter in 11 of the 100 largest metros, notes Trulia.
The housing recovery is shaky, and economic uncertainty fueled by nagging political battles is making several economist restless in light of signs that housing was already recovering, but is now seeing a slowdown in pace and diminishing consumer optimism, despite an uptick in refinance activity.
