Rates Hit New Lows; Purchase Applications Perk Up

By:: Kara Johnson | July 21, 2010

The real estate market showed a small glimmer of life last week, as mortgage applications for home purchases picked up slightly after hitting a 13-year low the week before.

Applications for home purchase mortgages rose a seasonally adjusted 3.4 percent, one week after hitting their lowest level since December 1996. It was only the second weekly increase in the 11 weeks since the end of the homebuyer tax credit program, as reported in the weekly survey by the Mortgage Bankers Association (MBA).

Spurring consumer interest were low mortgage interest rates, which fell to their lowest averages ever reported in the MBA weekly survey. The average rate reported on a 30-year fixed rate loan dropped to 4.59 percent, down from 4.69 percent the week before and besting the previous record of 4.61 percent set the week ending April 1, 2009.

The average rate on 15-year fixed-rate mortgages fell to 4.05 percent, also a new record, down from 4.12 percent the week before and besting the previous record of 4.06 set three weeks ago.

Refinancing at highest level in 14 months

The low rates have spurred renewed interest in mortgage refinancing, with refinance applications increasing a seasonally adjusted 8.6 percent for the week. It was the highest level of refinance activity reported by the MBA since May 22, 2009.

“The refinance index is up almost 30 percent over the past four weeks, but is still well below the peak seen last spring," said Michael Fratantoni, MBA vice president of Research and Economics. "Refinance borrowers, aiming for the lowest possible rate, are getting conventional loans. The strength in purchase applications comes from government loans, likely indicating that prospective buyers are drawn by the lower down payment requirements."

Refinance applications made up four out of five mortgage applications last week, hitting their largest share of the market since April 2009.

The current survey covers the week that ended Friday, July 16 and is based on loans with an 80 percent loan-to-value ratio.

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Loan Type	Today	+/-
30 yr fixed	3.72
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