Mortgage Applications Rise as Tax Credit Ends

By:
Peter King | May 05, 2010

Applications for home mortgage rose in the final week of April, as borrowers sought to take advantage of the expiring home purchase tax credits for new and repeat home buyers. 

Applications for home purchase mortgages were up 13.0 percent, according to figures released today by the Mortgage Bankers Association (MBA), for the third consecutive weekly increase. On a seasonally adjusted basis, it was the highest level of purchase applications since the week ending Oct. 2, 2009.
 
Overall, mortgage applications were up 4.0 percent for the week ending April 30, with refinance applications declining 2.1 percent. Refinance activity fell despite a decline in average interest rates, which commonly spurs consumer interest in refinancing.
 
The average rate on 30-year fixed-rate mortgages declined to 5.02 percent in the weekly MBA survey, down from 5.08 percent the week before. Rates on 15-year fixed-rate loans fell to 4.34 percent from 4.38 percent the week before.
 
Refinancing made up only 51.9 percent of all mortgage applications, down from 55.7 percent and its lowest share since the week ending July 3, 2009.
 
To qualify for the homebuyer’s federal income tax credits, new or repeat homebuyers had to have a sales agreement completed by April 30; they have until June 30 to complete financing and close the sale. Industry observers expect that home purchases will decline following the end of the program, but hope to see an increase once again in the second half of the year if the economy continues to recover.

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