In a recent article, Wallace Witkowski reported that the Federal Reserve said that they will begin buying mortgage loan securities backed by Fannie Mae, and Ginnie Mae in early January. The Fed said it “has selected private investment managers to act as its agents in implementing the program,” which is “separate and distinct from the U.S. Treasury’s program.”
The loan security buying will be financed through the creation of additional bank reserves, the Fed said. Interest rates for home equity loans, credit lines and FHA loans remain at record low levels.
The MBA survey, conducted weekly since 1990, covers about half of all U.S. retail mortgage loan applications. Its seasonally adjusted Purchase Index declined 17.4% week-over-week to 298.1 points, after rising 38.0 % the week ended Nov. 28 and 5.3% the week before that. Applications to purchase a home using FHA loans and other government-backed mortgages fell 213 % last week while applications for non-government backed loans fell 15.5%, the MBA said. FHA home loan applications for refinancing increased significantly as many homeowners who have been stuck with a variable interest rate scramble to refinance into a low fixed rate mortgage.
The number of mortgage loan applications filed nationally rose last week compared with a year ago, according to a report today from the Mortgage Bankers Association. In the week ended December 5th, the trade group’s seasonally adjusted Market Composite Index – a measure of overall mortgage loan application volume – was 796.8 points. That represented a decline of 7% from the 857.7 points of the week ended November. 28th, but an increase of 99.90% from the eight-year low of the week ended November 15 and a year-over-year increase of 2.2%.
The Refinance Index dipped 0.9% last week to 3,767.3 points, after surging 203.3% Thanksgiving week and falling 2.1% the week ended Nov. 21. Mortgage refinancing was the goal of nearly three-quarters of loan applications last week – 73.7% – up from 69.1% in the week ended Nov. 28 and 49.3% in the week ended Nov. 21, the MBA said. The share of mortgage applicants who were seeking adjustable-rate mortgage loans (ARMs) – rather than conventional fixed-rate home loans – fell to 1.1% last week from 1.4% Thanksgiving week and 3.0 % of applications filed in the week ended November 21st.
The average contract interest rate for a thirty-year, fixed-rate mortgage dipped to 5.45% last week from the previous week’s from 5.4 %, while the contract interest rate on a fifteen-year, fixed-rate mortgage loan declined to 5.09% from the previous 5.13%. But the average contract rate on a one-year ARM rose to 6.76% from the preceding week’s 6.61% average. Still, by historical standards, “mortgage applications for purchases remain subdued,” Anna Piretti, a senior economist at BNP Paribas in New York, told Bloomberg News. And, she added, “tighter credit standards suggest actual mortgage lending remains constrained, weighing on sales.”
The Mortgage Bankers Association is a trade group representing the real estate finance industry. Its 3,000 member companies include mortgage firms, commercial banks, thrifts, life insurance companies and others. Additional information, including the MBA’s Weekly Application Survey, is available at www.MortgageBankers.org.
