Mortgage Purchase Applications: Improvements

  • Seasonally adjusted applications to purchase homes jumped 11.7% for the week ending November 14th, a solid improvement in a series of gains following a weak trend in late October.  The purchase applications index is 6.1% lower than the same time in 2013.  Credit overlays and high cash shares continue to dog purchase application volumes, but regulatory clarity in the form of a final QM and QRM rules as well as overatures by the FHA and FHFA to improve clarity on lender risks should help to ameliorate some of the constriction.


  • The average rate for a conforming 30-year fixed rate mortgage as reported by the Mortgage Bankers Association eased to 4.18%, down slightly from last week.  The average rate a year ago this week was 4.46%.
  • The share of both FHA and VA loans increased in this week’s survey.
  • Equally strong were single family housing starts and permits for construction which reached their highest levels since last October.  Starts gained 4.2% on a monthly basis for the second consecutive month and were up 15.4% compared to a year earlier while permits rose 2.4% on a year-over-year basis.
  • Low inventories and an inventory miss-match, particularly at the entry level portion of the market, have hampered sales, particularly in non-judicial states.
  • Improved construction spending will help to alleviate inventory constraints as well as fuel job creation and buyer confidence as options improve.
  • This week’s readings suggest a solid improvement in mortgage applications and dovetails with the solid foot traffic and pending home sales figures from the last two months and point to a solid fall and winter market.  Additional construction will help to ameliorate tight inventories and fuel home sales, but without dampening price growth; construction remains low on a historical basis.  Consumers will benefit from employment growth and better options in the market.

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