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The MReport Webcast: Thursday 11/6/2014

A sharp upturn in refinancing activity helped push mortgage application volume to a double-digit gain last month even as purchase loan demand continued to fall. According to an examination of application numbers by Capital Economics, total mortgage application volume jumped 10.1 percent in October, bouncing back after four straight months of declines. The firm's report is based on numbers released weekly by the Mortgage Bankers Association.

The headline measure received a major boost from refinance applications, which were up 18.5 percent month-over-month to arrive at an eight-month high as average fixed interest rates sank to their lowest levels in nearly a year and a half. As refinances spiked, home purchase applications continued to languish, dipping half a percent after a gain of the same amount in September. The decline in that measure lines up with the Federal Reserve's most recent Loan Officer Opinion Survey, which showed demand for mortgages dropping on net in all loan categories.

Access to mortgage credit tightened in October, according to a report from the Mortgage Bankers Association. The group's Mortgage Credit Availability Index, a gauge of credit access based on borrower traits and underwriting trends, fell two and a half percent last month to a reading of 113.2. The decline comes as the Federal Housing Finance Agency begins a push to clarify repurchase requirements at Fannie Mae and Freddie Mac and to expand the acceptable range of loan-to-value ratios for mortgages purchased by the GSEs. While they have yet to be finalized, housing analysts hope those changes will help open up the credit box by easing lenders' fears of putback risks.

About Author: Jordan Funderburk

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