Real Estate Market Finally Catches a Break With This Downtrend

After posting a sharp decline, mortgage applications in the United States finally climbed higher to bounce off their worst level in years. According to the Mortgage Bankers Association’s latest report, for the week ended September 13, loan applications jumped 11.2 percent on a seasonally adjusted basis from one week earlier — only the 4th increase in 19 weeks. The figure includes both refinancing and home purchase demand, and covers more than 75 percent of all domestic retail residential mortgage applications.

The industry group’s refinance index surged 18 percent while the seasonally adjusted purchase index gained 3 percent. Overall, the refinance share of mortgage activity accounted for 61 percent of total applications, up 4 percent from a week earlier, which was its lowest level since April 2010. In fact, the refinance index crashed 71 percent from its peak during the week of May 3 to hit its lowest level since June 2009 earlier this month.

The average interest rate for a 30-year fixed-rate mortgage decreased from 4.8 percent to 4.75 percent — still near its highest rate since April 2011. The most recent average rate for a 15-year fixed-rate mortgage came in at 3.81 percent, compared to 3.83 percent the week before.

Between the beginning of May and the end of June, the average interest rate for a 30-year fixed-rate mortgage surged from 3.59 percent to 4.68 percent. Although interest rates are still low on a historical basis, the rapid pace of the rise has been a worry for the real estate market.

In the second quarter, 69.3 percent of new and existing homes sold were affordable to families earning the U.S. median income of $64,400, according to the National Association of Home Builders. That is down from 73.7 percent in the first quarter and is the first reading below 70 percent since late 2008.