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Consumers keep pushing mortgage market forward

September 28, 2017

Even as the summer approaches its official end, and the traditional window of the annual shopping season goes with it, there's little reason to doubt the market will remain strong in the fall as well. A number of positive effects continue to appear in the real estate and mortgage sectors, thanks in large part to the improving economy.

In the month of August, the total number of mortgage applications for the purchase of new homes increased 6.8 percent on an annual basis, and 7 percent from July, according to the latest Builder Application Survey from the Mortgage Bankers Association. This came as a result of lingering affordability engendered by rates shrinking for much of the month, and the ability of builders to actually put more homes on the market in the final full month of summer.

"Applications for new homes increased 6.8%."

However, there were some points of concern observed in these trends that could arrive in the wake of the major hurricanes that recently made landfall in the Southern U.S., the report said.

"Average loan size for new homes increased in August to $334,940, the highest level since the series began," said Lynn Fisher, MBA's vice president of research and economics. "More than one-third of applications for new homes in our August survey came from Florida and Texas. It is unclear what impact hurricanes Harvey and Irma will have on housing starts in the region in coming months, but it is likely that recent new home sales will be delayed in breaking ground."

Easier to get mortgage credit
Throughout August, lenders generally made it easier for would-be buyers and refinancers alike to obtain a home loan when they wanted one, the MBA further reported from its Mortgage Credit Availability Index. In all, the MCAI increased 0.7 percent to a reading of 180.2, versus a benchmark of 100 set in March 2012. Credit access for conventional, conforming, and jumbo mortgages all increased at least 1.4 percent in the month, while government-backed mortgage availability ticked up 0.1 percent.

"Mortgage credit access increased 0.7%."

However, it's worth noting that while it's about 80 percent easier to obtain a mortgage now than it was in 2012, the MCAI prior to the economic downturn would have been approaching 900, had it existed at that time.

A hopeful rebound
The uptick in mortgage credit availability and applications for new home purchases in particular could portend good things for the national housing market as a whole, because a number of factors came together in July to bring new home sales down sharply, according to CNBC. These include a relative lack of available new homes for sale in the first place, as well as higher prices caused by significant demand during the busy summer season.

With these issues in mind, more activity from builders and a potential step back for the total number of shoppers seen nationwide could produce a still-robust market that provides would-be buyers with plenty of options without as much of the stiff competition seen over the past several months.




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