A week after a big spike of almost 10%, mortgage applications fell 1.2%, according to data from the Mortgage Bankers Association’s weekly mortgage applications survey for the week ending March 14, 2014.
The MBA’s measure of mortgage loan application volume fell 1.2% on a seasonally adjusted basis from the week ending March 7.
The refinance index decreased 1% from the previous week. The seasonally adjusted purchase index also decreased 1% from one week earlier.
The refinance share decreased for the sixth straight week to 56.5% of total applications, down from 57% the previous week. ARMS stayed the same share of activity at 8% of total applications.
The MBA said the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.5% from 4.52%, with points decreasing to 0.26 from 0.29 (including the origination fee) for 80% loan-to-value ratio loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.39% from 4.41%, with points decreasing to 0.19 from 0.20 (including the origination fee) for 80% LTV loans.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.13% from 4.18%, with points decreasing to 0.18 from 0.21 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.52% from 3.53%, with points decreasing to 0.25 from 0.28 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
According to a report prepared by Ellie Mae, a mortgage technology company, the average FICO credit score for approved mortgage loans dropped to 727 in December 2013. It was 748 a year earlier.
The average credit score for home loans backed by Fannie Mae and Freddie Mac also dropped a little; December 2013 borrowers had an average credit score of 756, down from December 2012′s average of 761.
Refinance mortgages backed by Fannie Mae or Freddie Mac were approved with an average credit score of 729 in December 2013; this was a significant drop from the average credit score of 763 in December 2012.
Only 46 percent of mortgage applicants approved had credit scores above 750 in December 2013 while approximately 57 percent of applicants had credit scores over 750 a year earlier.
Reasons for approving mortgages with lower minimum credit scores include mortgage lenders’ growing confidence as the economy improves and mortgage defaults decrease. As rates rise and refinancing activity dries up, lenders may also exercise more flexibility with credit scores in order to encourage more business.
While this isn’t life-changing news for would-be mortgage applicants with sub-par credit scores, a mortgage lender’s willingness to work with less-than-perfect credit is a positive sign in the aftermath of the recession.
But wait — there are conflicting opinions concerning how or if mortgage lenders will change their minimum required credit scores for any but the best-qualified applicants. Mortgage applicants with credit problems can expect to encounter glitches on the path to mortgage approval. Mortgage Underwriting Policies: Out with Overlays — or Not
Another practice that can limit a mortgage applicant’s chances of approval is the use of “lender overlays.” Lender overlays are underwriting requirements, imposed by lenders, in addition to the guidelines set out by Fannie Mae, Freddie Mac or the federal government. Overlays create extra hoops for applicants to jump through (or get stuck in).
Some analysts have said that mortgage lenders may be willing to reduce or eliminate lender overlays if economic conditions continue to improve.
So far, most lenders have not reduced or stopped using overlays. Other economists and analysts believe that new federal “qualified mortgage” regulations will encourage mortgage lenders to maintain or further strengthen their mortgage approval requirements.
Unfortunately, the recession has caused home buyers to be less prepared to buy homes. The Ellie Mae report notes that homeowners who wanted to trade up were frequently blocked by a loss of home equity. The report also found that the weak economy made it more difficult to save for a down payment due to low yields on savings and ongoing unstable economic conditions.
With the help of low inventory levels and unprecedented actions by the Federal Reserve, higher home prices have been a life preserver to the real estate market. Millions of Americans are no longer underwater on their mortgages, but millions of homeowners are still struggling in the wake of the housing bubble.
In the fourth quarter of 2013, the national negative equity rate declined to 19.4 percent of all homeowners with a mortgage, according to Zillow’s latest Negative Equity Report. The reduction comes after the previous quarter witnessed the fastest decline on record. In comparison, 27.5 percent of homeowners with a mortgage were underwater one year earlier. The peak was made in the first quarter of 2012, at 31.4 percent.
The national negative equity rate has now declined for six consecutive years. In fact, this is the first time in years that the rate dipped below 20 percent. Almost 3.9 million homeowners were freed from negative equity during the final three months of 2013. While this is a significant improvement, many people are still underwater, especially in certain states. Nevada leads the nation with 34 percent of borrowers owing more than their homes are worth, followed by Georgia at 32 percent.
The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning. It noted an increase of 9.4% in the group’s seasonally adjusted composite index, following a drop of 8.5% for the previous week. Mortgage loan rates fell slightly on all types of loans.
The seasonally adjusted purchase index increased by 9% from the prior week’s report, but it is 19% lower year-over-year. On an unadjusted basis, the composite index increased by 11% week-over-week. The unadjusted purchase index increased by 12% for the week.
Adjustable rate mortgage loans account for 8% of all applications, unchanged from a week ago.
The MBA’s refinance index increased by 10%, after declining 11% in the previous week. The share of refinancings fell slightly to 57.7% of all applications, the lowest level since last September.
The average mortgage loan rate for a conforming 30-year fixed-rate mortgage increased from 4.53% to 4.47%. The rate for a jumbo 30-year fixed-rate mortgage declined from 4.47% to 4.37%. The average interest rate for a 15-year fixed-rate mortgage decreased from 3.56% to 3.52%.
U.S. home prices slowed down at the end of 2013, but posted the fastest calendar-year growth in eight years, according to data released Tuesday.
U.S. home prices ticked down 0.1% in December, declining for a second month, with 11 of 20 tracked cities posting drops, according to S&P/Case-Shiller’s composite index. After seasonal adjustments, home prices in December rose 0.8%, down a bit from 0.9% in November.
“Gains are slowing from month-to-month and the strongest part of the recovery in home values may be over,” said David Blitzer, chairman of the index committee at S&P Dow Jones Indices. “The seasonally adjusted data also exhibit some softness and loss of momentum.”
On a year-over-year basis, home prices rose 13.4% in December, the fastest calendar-year growth since 2005, supported by a low inventory of homes available for sale. However, December’s year-over-year growth is down from a recent peak of 13.7% hit in November.
A home for sale in Princeton, Illinois, on Jan. 22, 2014.
Going forward prices may continue to slow down if inventories rise as more sellers become willing and able to place their homes on the market. Also, climbing mortgage rates could curb some demand, economists say.
But slower price growth isn’t necessarily a bad thing. Prices that run too high too quickly for an extended period would keep many would-be buyers from purchasing a home.
If true love hasn’t found you this Valentines Day, here’s a look at five cities you can move to if you want to boost your odds of meeting the perfect mate.
“We feel that these are the places you should go to if you want to find love,” says economist Krishna Rao of real-estate site Zillow.com, which this week released its Valentines Day Index of America’s most singles-friendly locales.
The firm analyzed America’s 50 largest metro areas for three criteria key to finding your soul mate:
- what percent of the local population is single;
- how many restaurants and other date-friendly sites a place has per capita;
- how much disposable income the typical single has — an important consideration if you expect your date to at least sometimes pick up the check.
Rao says singles-friendly cities are actually harder than you’d think to find, as unmarried people make up just 50.8% of America’s total 15-and-older population.
Zillow also estimates that the typical single has just $1,301 a month of gross income left after paying rent — not always enough to pay for dates considering that also has to cover taxes, car payments and other expenses.
Lastly, Rao says the average U.S. community has just 15.9 restaurants, bars, museums and other date-suitable establishments for every 10,000 residents, meaning there aren’t always lots of interesting places to go.