April showers bring May flowers, but April is also expected to bring continued improvement to U.S. mortgage application levels, signaling the beginnings of a possible rebound for the battered housing market during the all-important spring buying season.
The latest numbers indicate that demand for home purchase loans is at its highest level since early October, and applications for mortgages climbed for the first time in three weeks.
While only a speculative early indicator, the demand for home purchase loans is a fair bellwether of future home sales.
According to figures released by the Mortgage Bankers Association, seasonally adjusted index mortgage applications increased by 1.3 percent by the end of last week. The figure accounts for both refinance and purchase loans.
The four-week moving average of mortgage applications levels, a better indicator than the highly volatile weekly numbers, showed a 2.2 percent climb.
At the same time, the MBA’s seasonally adjusted purchase index hit its highest levels since the end of October, reaching 6.8 percent.
Though a positive sign nevertheless, Analysts note that the growth may be due in part to the impending expiration of a homebuyer tax credit, mirroring the same phenomenon seen in October with the expiration of a similar tax credit.
As part of a governmental program originally slated to expire on November 30 of this past year, first-time homebuyers meeting certain criteria could receive an $8,000 tax credit. In an effort to stimulate further recovery, the Obama administration extended the program until April 30, and added an additional $6,500 for buyers opting to purchase new homes. The extension also increased income limits.
Some industry observers say, though, that the tax credit has become less and less of a factor is boosting home sales over time, citing that most buyers in a position to take advantage of the credit would have already done so.
On the other hand, home loan refinancing is suffering because of higher mortgage rates. MBA numbers indicate that refinancing application levels have hit their lowest point since mid-February, decreasing by 1.3 percent.
Interest and unemployment rates are primary indicators of the health of the housing market. Mortgage rates play a key role in dictating the affordability of home ownership.
Despite a positive trend in home sales data from the final months of 2009, home sales in February hit a plateau, with new home sales hitting record lows and existing home sales registering declines for a third month.
Eric Bramlett is the broker & co-owner of One Source Realty, a boutique Austin real estate firm. Eric actively invests, assists his agents, and works with select buyers & sellers. Eric specializes in downtown Austin condos, as well as Steiner Ranch real estate.
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Eric –
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& thank you for your guest blog here on Angelas website!