US Home Loan Demand Surges to Near Four-Year High

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US Home Loan Demand Surges to Near Four-Year High
U.S. mortgage applications surged last week, with demand hitting its highest in nearly four years as interest rates plunged, an industry group said Wednesday.



The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended Jan. 11 surged 28.4 percent to 906.4, its highest since the week ended April 2, 2004.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.62 percent, down 0.11 percentage point from the previous week, and its lowest since the week ended July 1, 2005, when they stood at 5.58 percent.

Interest rates were below year-ago levels at 6.19 percent.

Douglas Duncan, chief economist at the MBA, said the robust data offers a glimmer of hope for housing.

"When consumers see an opportunity, no matter how pessimistic they might be, they take it," he said. "It will improve the underlying state of the industry and the longer rates stay down, the more people will take advantage of the opportunity, so that is a good thing."

Mortgage rates have fallen along with U.S. Treasury yields.


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30 yr fixed 5.42% 5.60%
30 yr fixed jumbo 6.46% 6.59%
15 yr fixed 4.95% 5.21%
15 yr fixed jumbo 5.95% 6.20%
5/1 ARM 5.19% 6.00%
5/1 jumbo ARM 5.67% 6.16%

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The benchmark 10-year U.S. Treasury note yield fell below 3.68 percent on Tuesday, its lowest since July 2003 as stocks plunged and expectations of aggressive interest rate cuts from the Federal Reserve rose. Yields move inversely to price.

Overall mortgage applications last week were 35.9 percent above their year-ago level. The four-week moving average of mortgage applications, which smoothes the volatile weekly figures, was up 10.1 percent to 687.5.

Fixed 15-year mortgage rates averaged 5.07 percent, down from 5.21 percent the previous week. Rates on one-year adjustable-rate mortgages (ARMs) decreased to 5.77 percent from 6.04 percent.

Demand Surges

The MBA's seasonally adjusted purchase index, widely considered a timely gauge of new home sales, jumped 11.4 percent to 461.2, its highest since the week ended Dec. 7, 2007. The index came in above its year-earlier level of 439.7, a rise of 4.9 percent.


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Demand for home loan refinancing surged last week as the group's seasonally adjusted index of refinancing applications skyrocketed 43.4 percent to 3,575.5, its highest since the week ended April 2, 2004. The index was up 74.8 percent from its year-ago level of 2,045.8.

The refinance share of applications increased to 62.7 percent from 57.7 percent the previous week. The ARM share of activity edged down to 9.2 percent from 9.3 percent.

"This time of the year you always have to be careful about weather patterns and other factors," Duncan said. "I really think this is, at least in some instances, evidence that with mortgage rates dropping and house prices having leveled off or fallen in some places, there is an improvement in affordability underway."

This week ushers in other key data gauging the state of the hard-hit U.S. housing market.

The National Association of Home Builders will release its January NAHB/Wells Fargo Housing Market Index on Wednesday and the Commerce Department will release data on December housing starts on Thursday.
 
yeah not a bad thing since not too much in homes are imported and the falling as the interest rate drops dollar should not impact home prices negatively.
 
ugg rates getting so low on that 15year that its tempting. Must stand strong

what would stop you? You can refi the remaining balance of your loan and be in the same place you are now. Just keep paying the same amount as you are now and you will actually INCREASE the percentage of principal in each payment.
 
what would stop you? You can refi the remaining balance of your loan and be in the same place you are now. Just keep paying the same amount as you are now and you will actually INCREASE the percentage of principal in each payment.

whats stopping me is im 5years into whats basically a 16year loan. amortization wise im paying a good chunk of principal every month.. i dont want to refi and reset the amortization curve so that its back to all interest again.
 
Good deal Dung.

Housing will go down but it will be back up at some time even if if takes ten years to do so. You have to live somewhere so your own home is always a good bet. Im waiting because its going to be strickly an investment.
 
whats stopping me is im 5years into whats basically a 16year loan. amortization wise im paying a good chunk of principal every month.. i dont want to refi and reset the amortization curve so that its back to all interest again.

But that is what I said. Refi. But do not pay the new mortgage payment (which will be lower). Pay your current mortgage payment. If you only refi the remaining balance amount, your principal percentage actually increases, not decreases.
 
But that is what I said. Refi. But do not pay the new mortgage payment (which will be lower). Pay your current mortgage payment. If you only refi the remaining balance amount, your principal percentage actually increases, not decreases.

hmm well i get that. Right now im on a 20year i started in aug 2003 at 5%. i started right from getgo on equity accelerators paying weekly... wich effectively took almost 4years of the loan.
 
hmm well i get that. Right now im on a 20year i started in aug 2003 at 5%. i started right from getgo on equity accelerators paying weekly... wich effectively took almost 4years of the loan.

well then, if you get that, then you no longer have to worry about being tempted. You can go for it. But I do agree with you on waiting 6 months. Because I also think it will drop another point or so.
 
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