As 15-year mortgage rates set a new low-water mark, based on Mortgage Bankers Association record keeping, mortgage refinancing activity took off, and drove the continuation of the recent surge in mortgage activity. However, low rates are not giving prospective real estate investors the impetus one might expect just yet.
In its latest reporting, the Mortgage Bankers Association reported that contracted rates for 30-year and 15-year fixed rate mortgages fell to 4.32% (from 4.37%) and 3.47% (from 3.52%), respectively. As a result, the MBA’s Market Composite Index of mortgage activity increased 4.1% in the week ending August 12. The gains were, of course, driven by an 8.0% increase in the Refinance Index, just the latest in a series of weekly increases. This can be seen in the four-week moving average increase in the Refinance Index, which is now 10.1% higher. In fact, refinancing activity now accounts for 78.8% of total application activity, up from 75.6% the week before, and from the 60s not long ago.
That said, the Purchase Index, which measures mortgage applications for the purchase of a home, actually fell 9.1% in the latest period. The four-week moving average for the Purchase Index was also down 2.2%. We theorize that the wild volatility of equity markets over recent weeks is keeping whoever is not on vacation sidelined with regard to real estate prospecting. Indeed, with the economy gaining an increasing number of recession forecasts, you can expect all sorts of frozen business, including in hiring and housing. This has us reminding readers that our forecast for housing growth this year is qualified and dependent on economic growth.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
