With mortgage rates decreasing, loan applications grow
Posted on Thursday, October 22, 2015 at 1:28:49 PM
After the decrease in Treasury yields following Federal Reserve Governor Daniel Tarullo's announcement that short-term interest rates would remain near zero into 2016, 30-year fixed-rate mortgage rates fell three points to 3.79 percent, down from an average of 3.82 percent last week. The trend of falling mortgage rates continues to benefit the housing market.
Freddie Mac released the updated rates in its Primary Mortgage Market Survey. The 30-year FRM is in a stronger position than it was at this point last year, when it averaged 3.92 percent. The 15-year FRM also showed improvement, down to 2.98 percent from 3.08 percent the year before. Sean Beckett, Freddie Mac's chief economist, stated that September's housing starts exceeded expectations.
The decreasing mortgage rates were reflected in the Mortgage Banker's Association Market Composite Index, a measure of the volume of mortgage loan applications, which recorded an 11.8 percent increase from a week earlier. Applications for FHA loans increased as well, from 12.6 percent to 14.3 percent.
Residential lending to first-time homebuyers is on the upswing as the National Association of Home Builders' index reported a 10-year high this month. All signs point to mortgage loans decreasing further still, putting the housing industry in a prime position for sustained growth.