As a sign that homebuyers are getting more confident about their financial conditions, demand for purchase home loans rose in the week ending November 19. Loan applications for home purchases jumped 14.4% in the week compared to the previous week. This is according to the Weekly Mortgage Applications Survey released by the Mortgage Bankers Association (MBA).
The increase in purchase loan demand was at its peak since the demand in the May 7 week, which followed the April 30 expiration of government tax credit for home purchases. The comparative rise in loan purchase demand was attributed to absence of any adjustment in time for the holiday and the inclusion of the Veterans Day commemoration in the preceding week.
However, the survey also revealed that mortgage refinance applications fell in the same week by 1% compared to the volume in the preceding week. It was also the lowest level for such loan since June, following rise in rates of 30-year fixed-rate home loans.
Market analysts asserted that the stronger home purchase loan applications in the week were in line with other data, which suggest that most consumers are now getting more confident when it comes to their respective financial conditions. However, such demand for home purchase loans remain lower compared to year-ago figures.
In comparison, applications for same home purchase loans in the same period last year was 7.4% higher. In the week ending November 19 this year, loan applications for refinancing existing loans comprise up to 78.6% of all home loan applications. It was down from 80.3% in the previous week.
Meanwhile, contract interest rate average for 30-year fixed-rate home loans rose to 4.50% that week from 4.46%. That was a record average rate in the same survey since the week that ended September 3. For 15-year fixed-rate home loans, the contract interest rate fell to 3.83% from 3.87%. Analysts read the figure as an almost unchanged rate.
Some market observers noted that the rise in weekly demand for home purchasing loans was interesting. According to them, it was because such demand has been falling since September, when major home lenders acted to increase restrictions on home loans following alleged anomalies in foreclosure processes.
Home lenders have been accused of mishandling foreclosures. Investigations are still conducted to shed more light to the issue. But most home lenders have stalled foreclosures and in turn, also increased strictness in processing loan applications.
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