Mortgage loan demand and the refinancing of mortgages have both increased significantly recently. However, the new mortgage reforms may soon have a substantial impact on the ability of the average American to obtain a home loan. Let’s first examine the demand for home loans. Figures released by the Weekly Mortgage Application Surveys shows that demand increased 1.1 percent after seasonally adjusted while the purchase index also seasonally adjusted increased 1.5 percent during the week ending May 20, 2011. When not adjusted for season, the mortgage application demand increased 0.9 percent compared to the week ending in May 13, 2011.
The refinancing market has also seen quite a bit of a boom; applications for refinancing went up by 0.9 percent compared to the week ending on the 13th. That is its highest level since December 10, 2010. For a four week period it is up 7.1 percent. As a result, the refinance portion of the mortgage market increased 66.8 percent of the total demand for mortgages. The week before was 66.7% of total demand. The refinance share of the market is said to be at its highest since January 28, 2011.
When it comes to the primary mortgage market it seems like refinancing is definitely on the rise. On the other hand, the secondary market seems rather stagnant. Many prospective buyers are waiting by anxiously because they may have missed out on the recent historic low rates. They don’t want to miss their chances again in case rates reach low levels again.
Interest rates actually increased. Rates for a thirty year mortgage increased from 4.60 percent to 4.69. For fifteen year loans the rate increased to 3.78 percent from 3.75 percent. Points decreased to 0.69 from 0.93 for 30 year fixed and dropped to 1.04 from 1.22 for 80 percent LTV loans. After seasonal adjustment it appears that sales for single family homes increased by 7.1 percent in April. These numbers far surpassed what experts predicted; over 323,000 homes were sold. Around 300,000 is what most experts were predicting. This marks the second consecutive increase since February when new home sales were 278,000. By the way, the 278,000 sales numbers is said to be the lowest level of sales since the Census Bureau started monitoring statistics 50 years ago.
Sales rose in all regions of the country. However, there was a 23% decline in annual rate sales over all when compared to April of last year. Sales then were 420,000 units, which was a pre-crash peak and just before the end of a home buyer tax credit incentive. Median sales price for a home was $217,900 which is up from $208,300 from the same period last year. The cost of homes has also decreased by approximately two thousand dollars. The average price is now around $269k.
The price of a new home is also a lot more affordable now. The majority (around 75 percent) of all home buyers had an average family income. 74.6 percent of all homes sold in the country were affordable to a family with an income of $64,400. This means that more than seventy percent of homes sold are within financial reach for most individuals.
The requirements to obtain a home loan are becoming stricter because of the new mortgage reforms. Consumers will need to put down a large down payment plus many will not be able to meet the strict income requirements. The government is hoping that these guidelines will make mortgages “safer” and less risky.