U.S. mortgage applications rose last week, reflecting an increase in demand for home refinancing loans as interest rates trekked lower, data from an industry group showed on Wednesday.
I forecasted this new refinancing explosion in Credit Repair News back in December when I reported the Federal Reserve, "lowered its benchmark interest rate to as low as zero for the first time in half a century." (see Federal Reserve Opens Door To Refinance Boom)
However, demand for home purchase loans, an indicator of home sales, dropped. This is a reflection of how hard-hit the U.S. housing market is, being that spring is traditionally the peak home buying season.
A recent survey of our own clients shows they are working on improving their credit scores, with the goal to take advantage of these low rates as soon as a recovery in housing begins to occur.
Combining a high credit score with historically low housing prices means consumers can buy more house with less payment.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended May 15 increased 2.3 percent.
Brokers reported that there was a large wave of applicants when interest rates on mortgages first came down and these loans are still being worked through the production cycle. Although that initial surge has tapered somewhat, there is still very strong demand.
The interest rate on a 30-year fixed-rate mortgage, excluding fees, averaged 4.69 percent, down 0.07 percentage point from the previous week, but above the all-time low of 4.61 percent set in the week ended March 27.
Loans are still very attractive when compared to rates one year ago of 5.90 percent.
Refinance Boom Continues