Mortgage applications more than double

Bankers' group cites Fed's bailout of Fannie and Freddie for plummeting rates, with refinancing leading the way.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Julianne Pepitone, CNNMoney.com contributing writer

mortgage_application.ce.03.jpg
Rates plummeted following the Fed's announcement that it would buy debt and securities from Fannie Mae and Freddie Mac.
Mortgage Rates
30 yr fixed 3.80%
15 yr fixed 3.20%
5/1 ARM 3.84%
30 yr refi 3.82%
15 yr refi 3.20%

Find personalized rates:
 

Rates provided by Bankrate.com.

NEW YORK (CNNMoney.com) -- Mortgage applications more than doubled last week, a mortgage bankers' group said Wednesday, as government bailouts led to sinking interest rates that made refinancing especially more attractive.

In the weekly report, the Market Composite Index - the association's measure of mortgage loan application volume - surged 112.1% on a seasonally adjusted basis from the week earlier.

On an unadjusted basis, the index increased 51.4% from the previous week; it was down 21.9% from a year earlier, the report said. Results included an adjustment to account for the Thanksgiving holiday.

Rates plummeted following the Fed's announcement that it would buy debt and mortgage-backed securities from mortgage finance companies Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500), according to Orawin Velz, associate vice president of economic forecasting, in a statement.

"Many of those on the sidelines decided to quickly jump in and take advantage of lower rates before they began to rebound," Velz said.

The Mortgage Bankers Association said 30-year fixed-rate mortgages fell to 5.47% this week. That's was down from 5.99% last week.

Rates on 15-year fixed-rate mortgages fell to 5.13% from 5.78%, the report said. The rate on a one-year adjustable-rate mortgage declined to 6.61% from 6.87%.

Refinancing

While the application statistics were high, "this is more a refinance story than a purchase story," said Mike Larson, real estate and interest rate analyst at Weiss Research.

The report's Refinance Index increased 203.3% to 3802.8 from the previous week, and the seasonally adjusted Purchase Index increased 37.4%.

"While purchasing a home is a big commitment, refinancing is often a no-brainer," Larson said. "You may be less inclined to go buy a house in this weak economy. Refinancing will go forward if the gains can hold."

In the short-term, the Fed "did manage to get quite a bit of bang for their buck," Larson said. "Most things they've done so far have improved some credit spreads slightly, but you didn't see the effect on Main Street. Now, these are big numbers - the biggest we've ever seen."

Today's rates are lower because lenders' standards are tighter, Larson said, so many buyers applying may not have the equity they need for approval. As a result, more applications "might end up in the circular file rather than the closing tables," he said.

Still, Larson expected the Fed's actions will result in more staying power and success, giving stressed homeowners a bit of breathing room.

"The Fed gave us an early Christmas gift," he said. To top of page

Find mortgage rates in your area


Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.