Demand for Home Purchase Loans, Mortgage Rates Climb

 

Demand for loans that are intended to be used for purchasing homes rose to a seven-month high last week. According to the Mortgage Bankers Association (MBA), purchase loans demand increased to 1.1% (seasonally adjusted) for the week that ended on November 26.The group said the result was appropriately adjusted to reflect the impact of the Thanksgiving holiday. Comparatively, purchase loan applications rose 2.7% in the same period last year. MBA said demand for mortgage refinancing dropped 21.6% that week compared to the preceding week. It was the third week in a row that the mortgage refinance index of the group fell. Demand for mortgage refinancing accounted for up to 74.9% of total loan applications for the same week. That was down from 78.6% in the preceding week. On the other hand, mortgage rates rose in the week ending December 2. According to the US Federal Home Loan Mortgage Corporation, or Freddie Mac, home loan rates followed the lead of bond yields, which also rose that week, amid indications that economic growth was on the way. Analysts said an economic gain is usually seen by bond investors as less attractive for buying bonds as rates usually go up. The 30-year fixed rate on mortgages climbed 0.8 point to an average of 4.46% in the week ending December 2. That was higher than the 4.4% average last week. The peak was at 4.71%, recorded at the same period last year.Rates for 15-year fixed-rate mortgages averaged 3.81% from 3.77% in the preceding week. That was still lower compared to the 4.27% average in the same weekly period last week. 5-year Treasury-indexed adjustable rate mortgages climbed to 3.49% from 3.45% in the preceding week, but still lower than 4.19% in the same period last year. Most market analysts agree that if economic recovery and growth would continue to rise, mortgage rates would also move up. MBA has released a forecast stating that mortgage rates for 30-year fixed-rate home loans would rise to 5.1% in the fourth quarter of next year. It also predicts the rate to further rise to 5.7% by 2012’s second half. Freddie Mac and MBA are conducting weekly market surveys to monitor mortgage and mortgage refinancing rates. For more news and information about the mortgage industry as well as about foreclosures, check out ForeclosureConnections.com. The Website is regularly updated to feature insightful news covering foreclosure markets.

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