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Consumers continue to pursue buying opportunities

January 18, 2018

Concerns about long-term affordability were often cited by housing industry experts as potential stumbling blocks for an increase in purchase volume. However, even as the new year began with rising rates, it seems little has been done to dissuade would-be buyers from trying to get into the market, even at a time when housing activity remains relatively depressed due to seasonal norms.

"Application filings rose 8.3%."

Indeed, in the week ending Jan. 5, including an adjustment for the New Year's holiday, interest in both purchase and refinance home loans increased sharply, with application filings rising 8.3 percent combined, according to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association. Refinance requests surged 11 percent from the previous seven-day period, while purchase requests were up 5 percent on a weekly basis, but down 1 percent year over year.

Consequently, the share of the mortgage market ticked up to 52.9 percent from the previous 52.1 percent, the report said. Nonetheless, the sales market in particular remains strong despite rising costs.

Continuing a trend
In addition, the number of purchase mortgages sought to buy newly built homes in December ticked up 7.8 percent on an annual basis, but was down 18 percent from the previous month, according to separate MBA data. That kept December in line with a year-long trend of surging new home sales even as inventory remained notably constricted.

"Looking at all of 2017, applications increased by 7.1 percent compared to 2016," said Lynn Fisher, MBA Vice President of Research and Economics. "Based on December applications, we forecast that new home sales fell in December but remained nearly 16 percent higher than a year ago, and we are anticipating only modest year over year growth for new home sales in 2018. Despite robust demand, a lack of labor and land will continue to constrain homebuilders."

Rates still in a holding pattern
For some time now, average rates on 30-year fixed-rate mortgages have been hovering in the 3.9 percent range, slightly below the 4 percent that seems to be a cut-off for potential buyer interest. In the week ending Jan. 11, rates nearly crested that mark, hitting 3.99 percent after rising from the previous week's 3.95 percent, according to the latest Primary Mortgage Market Survey from Freddie Mac. Despite expectations for larger increases in the new year, that number was still down from the 4.12 percent seen in the same week in 2017.

Likewise, rates for 15-year FRMs, which are traditionally used in refinances, ticked up as well, rising to 3.44 percent from the previous week's 3.38 percent, the report said. That number was also up from 3.37 in the same week a year ago.

Generally speaking, the more consumers can do to get into the market sooner than later, the better off they will be in terms of locking in both the most affordable prices and rates likely to be available any time soon. Both are expected to rise slowly but continually throughout the year ahead.




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