Driven by a wave of FHA loans, applications for mortgages to purchase a home reached their highest level since May last week, but they still trail the 2010 application rate by more than 34 percent.
Purchase application rates are good indicators of future sales, and the weekly uptick could indicate an improvement in demand that is still far below 2010 levels. The Mortgage Bankers Association’s unadjusted purchase mortgage index increased 9.1 percent last week over the previous week and is now 34.7 percent below the year ago.
“The increase in purchase activity was led by a 17.2 percent increase in FHA applications, while conventional purchase applications also increased by 3.6 percent,” according to Jay Brinkmann, MBA’s chief economist. “This is the second straight weekly increase in purchase applications and the highest purchase index level since the expiration of the homebuyer tax credit program. One possible driver of last week’s big increase in FHA applications was a desire by borrowers to get applications in before new FHA requirements took effect Oct. 4, which included somewhat higher credit score and down payment requirements.”
In four-week moving averages, the seasonally adjusted market index is down 3 percent, the purchase index is up 2 percent and the refinance index is down 4.2 percent. Refinancings accounted for 78.9 percent of all mortgage applications last week, down from 80.7 percent the week earlier.
The MBA said interest rates for 30-year fixed and 15-year fixed mortgages fell once again last week to new record lows. The average rate for the 30-year fell to 4.25 percent from 4.38 percent and the 15-year decreased to 3.73 percent from 3.77 percent.
What percent of all mortgage loans are FHA insured? What percent of all mortgage loans were FHA insured on average before 2000? I suspect that the difference is quite large with FHA insured mortgage loans representing a disproportionately large percentage of all mortgage loans in 2011. In other words, more proof that we have an “artificially propped” housing market and can make no realistic predictions regarding a housing market recovery.
Jim, you’re right.
These days, about 30 to 40 percent of all purchase mortgages are guaranteed by FHA.