Further mortgage rate declines occurred in the real estate market this week as the 30-year and 15-year average fixed mortgage rates fell to new record lows.
The 30-year average fixed-rate mortgage dropped 2 basis points below its previous record low to 3.34%, according to Freddie Mac's Primary Mortgage Market Survey. The PMMS also reported a new weekly record low for the 15-year fixed-rate mortgage at 2.65%.
Mortgage application activity rebounded, according to the Mortgage Bankers Association. The MBA's Weekly Mortgage Applications Survey showed an increase in mortgage applications of 12.6%. This followed five consecutive weekly declines which led to a 27.2% decrease in the Market Composite Index for the five-week period.
Refinance applications also increased by 13% during the week, following a five-week decline. The Refinance Index fell a total of 31% in the prior five-week period.
Purchase application activity, the third composite measure in the MBA's survey, increased 11%. The 11% increase was the greatest since the June 14 week when the Purchase Index added 13%.
During the November 16 week, Freddie Mac (OTCQB:FMCC) also released its November 2012 U.S. Economic and Housing Market Outlook which showed the market's strong gains and projected further improvements to continue. It highlighted the importance of comparing housing market statistics to average pre-peak levels in order to maintain realistic expectations of potential housing market growth.
The report highlighted the gains in housing starts, sales and prices. It projects further progress in these three measures on a per year basis with housing starts estimated to increase to 1.0 million in 2013, sales to increase to 5.6 million and prices to level off slightly declining 1.0% by the end of 2013.
The November 16 week showed a continued recovery occurring in the U.S. housing market. Mortgage rates remained at low levels and the MBA's Purchase Index improved 11% signifying the intended effects of the Federal Reserve's quantitative easing on the economy. Freddie Mac's November 2012 U.S. Economic and Housing Market Outlook further highlighted the market's progress and stated a housing market in healthy recovery would need to continue developing at a rate that would achieve benchmarked pre-peak levels over the next five years.