More people are searching for their dream home. Last week, the applications for home mortgage in the US increased dramatically. This was after a strong sell-off happening in the US stock market which pushed the interest rates low.
Loan borrowers were much enticed by the attractive savings they will be making. Accordingly, the index of application for mortgage shoots up to 11.3 percent on a week ending August 28. This data is according to the Mortgage Bankers Association. The total volume is now up by 30 percent compared to a year ago.
The chief economist of MBA said that although the rates in mortgages remained unchanged for the week, the Treasury rates on the other hand went down sharply earlier this week because of the global stock market collapse which led to a dramatic increase in the mortgage application volume.
The refinance applications which are deemed to be most rate-sensitive increased to a whopping 17 percent from last week. This increase was the recorded highest level since April of this year. The loan applications associated with purchasing homes which is less responsive to the change in interest rates rose only by around 4 percent during the week and overall registers 25 percent higher compared to the levels last year.
The average interest rate for contract of 30 year fixed rate mortgages with loan balances of about $417,000 remained constant at 4 percent. The points increased from .36 to .37 for an 80 percent loan to value ratio. Borrowers who had larger loans were the one who were attracted with the drop in interest rates as they are bound to save more from this development.
The average size of applications linked with refinancing increased to high records since January. Surprisingly, the Adjustable Rate Mortgage also increased last week, reaching highest level since last year. This turn of events is driven by the response of the jumbo borrowers. These huge borrowers tend to favor ARMs to some greater extent compared to other vehicle of investment. The rising values of homes are also quite reassuring to borrowers which make them feel safer.