Numbers Count: Weekly mortgage data highlights

Wendy Cutrufelli
Posted by Wendy Cutrufelli
Mortgage Banking

Numbers do count to us as bankers and to prospective home buyers, sellers, and real estate professionals. Here’s my take on the key numbers regarding the housing market this week.

The numbers: Refis up, rates down

Family (father, mother, daughter) on an empty porch in front of a 'sold' signAverage interest rates on most mortgage products fell last week to their lowest levels in almost a year, according to the Mortgage Bankers Association’s Weekly Mortgage Application Survey for the week ending May 30.

The average rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 4.26% from 4.31%. The average rate on jumbo loans decreased to 4.22% from 4.23%.

The refinance share of mortgage activity increased to 53% of total applications from 52% the previous week, the association said.

What counts: If you missed out on refinancing before rates started rising last spring, you may have a second chance. And the opportunity may be more appealing today given the double-digit home price appreciation in many markets last year. That increased value means some borrowers today may be able to take advantage of additional equity in their homes to do a cash-out refi.

Also, some homeowners who may have had negative equity a year ago and could not refinance may now be in a position to do so. Generally when home values are up and interest rates are down — that’s an ideal scenario to consider refinancing to potentially lower your payment or tap equity in your property.

Interest rates are expected to rise this year as the economy strengthens, so this refi opportunity may not last. Our Chief Economist Scott Anderson forecasts rates on 30-year fixed-rate mortgages to be around 4.65% in the fourth quarter.

The numbers: April home sales inch higher

Pending home sales rose in April for the second consecutive month, according to the National Association of Realtors’ Pending Home Sales Index released May 29. The index, based on contract signings, increased 0.4% from March but is down 9.2% from a year ago. Regionally, the pending home sales index declined almost 3% in the West and 0.6% in the South. Pending sales in the Midwest rose a healthy 5% and 0.6% in the Northeast.

What counts: The market seems to be recovering from last year’s rise in mortgage rates. And, now with interest rates near one-year lows and home price appreciation moderating (see my post last week), you could expect to see increased buying activity. We should see both more home shoppers and more sellers putting homes on the market, which will help the inventory side of the equation. In this market if you are serious about buying, be sure to get a preapproval from a mortgage lender, which will help you make a strong offer on a home.

National Association of Realtors Chief Economist Lawrence Yun also expects the gradual uptick in sales to continue. He said the decline in rates is raising prospective homebuyers’ confidence at the same time that higher inventories are giving home shoppers more choices.

 

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