Mortgage applications finally moved after staying on the same level for three weeks due to a drop in interest rate.
According to the Mortgage Bankers Association (MBA), mortgage applications rose to 4.7% for the week that ended on July 31 in contrast to the total applications the previous week. Refinances are also on the move as it rose 6% while mortgage applications for purchasing home had three percent raise for the week but it's already 23 percent higher than last year's same week.
According to Lynn Fisher, MBA's vice president or research and economics, "Despite recent concerns about the economy, both purchase and refinance applications increased strongly in response to lower interest rates last week. Refinance activity was the highest since May when rates were last at this level. The increase in purchase activity was also notable for this time of year."
A 30- year- fixed- rate mortgages decreased to 4.13% from 4.17, the lowest since May 2015. Also, an average loan size which has been continually decreasing, edged back again and lower rates give consumer more purchasing power.Though low interest rates can only be enjoyed for a short period of time, as it usually moved higher every Tuesday, it will be a major deciding factor on how high the interest rates will be for the next succeeding weeks. Different rates also affect the mortgage credit availability which is still perceived as too strict and holds back a healthy housing recovery.
According to Federal Reserve's July 2015 Senior Loan Officer Opinion Survey on Bank Lending Practices, banks have lift strict lending guidelines for numerous categories of residential mortgage loans for the past three months. Banks have only exempt government- insured loans and the lifting of strict guidelines was more focused on residential mortgages that follow to Consumer Financial Protection Bureau's rules on qualified mortgages.
