Mortgage applications increase; loan modification falls

Desert landscape

Real estate may be a veritable desert, but there are some signs of life. Image from Wikimedia Commons.

The housing market in the past year has been a series of small hits and big misses. Banks, buyers, sellers and real estate agents alike are awaiting a return to at least some decent activity. Some signs of life are beginning to show. There was a recorded uptick in the number of new mortgage applications for purchasing a home. Not only that, but applications for loan modification dropped a little bit. However, applications to modify existing loans into low cost loans, or at least lower cost, are still the bulk of mortgage activity, which is significantly low.

New mortgage applications increase

The number of mortgage applications for the purchase of a new home has increased. The Mortgage Bankers Association recorded an increase of 6.3 percent in applications for a purchase, according to Reuters, which is the first significant increase since May of this year. However, it isn’t exactly great news. An increase is an increase, but the number of applications turned in to loan lenders for a home loan is at record low levels. Mortgage loa forms rates are down about 40 percent since May 2009.

Modifications are the bulk of activity

The vast majority of mortgage applications are still for mortgage modification. Applications for a modification dipped 3.1 percent, a slight decrease since May of this year, but modification applications made up almost 82 percent of all mortgage applications. Currently, mortgages of nearly any configuration are low interest loans, as the rate for 30-year fixed mortgages is at 4.5 percent, a 20 year low. The MBA started calculating these statistics in 1990, and the current rates are nearly the lowest they have ever been. The low rates make for a great opportunity to refinance. However, since finance loans are so much harder to access, it is difficult for many to reap the benefits.

Little stimulated

The stimulus seems to not have worked. As the tax credit only managed to temporarily propped up home sales, and the federal refinance program barely works, it seems that the recovery to housing must come from below. More people will need to be working for housing as an industry to have a chance.



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