Apparently the idea of “springing forward” applies to more than just Daylight Savings Time! So far, the spring of 2016 is proving to be quite a busy time for the nation’s volume of home sales. A combination of factors is likely driving this welcome surge of activity. It’s been eight years since the big housing market meltdown and it looks like there is finally a flood of eager new home buyers who recognize the advantages of investing in a home.
Another motivating force is near record low mortgage rates. In early April the Mortgage Bankers Association (MBA) reported a one-week rise of 10 percent in new mortgage applications. In the y-o-y analysis, they increased by an impressive 24 percent. The MBA also noted that refinancing activity has been strong throughout 2016. In the first few weeks of April, applications for refinancing mortgages jumped by 11 percent.
In a story for CNBC’s Realty Check, Diana Olick interviewed the MBA’s chief economist, Michael Fratantoni. He explained that springtime mortgage rates have been on the decline due to concerns about a slowdown in the global economy, even though in the U.S., the job market is strong. Fratantoni noted that, “Rates also are increasingly volatile as markets react to different signals regarding the future path for the Fed. This drop in rates is providing what will likely be only a temporary boost in re-fi activity.”
Olick in turn revealed that for a conforming loan balance of $417,000 or less, the average contract interest rate for a 30-year fixed rate mortgage went down from 3.86 percent to 3.82 percent. On the flip side, points increased from 0.32 to 0.33 for 80 percent LTV loans. The MBA confirmed that this is the lowest since January 2015.
This news has spurred a wave of homebuyers to take the plunge and apply for mortgages. The CEO of Mortgage News Daily, Matthew Graham, affirmed that he’s had numerous reports from lenders who’ve said that this springtime surge in home sales is partially due to borrowers who missed previous opportunities to lock in on low mortgage rates now getting back in the game. Market watchers are holding their collective breath and expecting the surge to continue!