Weak Spring Season for Mortgage Loans


Fewer people apply for and take out mortgages in the spring of 2014 compared to previous years. Instead of heating up as expected during the traditional house buying season, the market for home loans is experiencing ever greater slowdown. This occurs despite the fact that the predictions for significantly higher mortgage rates have not come true, at least for the time being.

During the final week of April 2014, the number of mortgage applications fell by 5.9% on a seasonally adjusted basis. This significant dropped occurred after a decline of 3.3% during the previous week. The index for home-buying mortgage loan applications which is also adjusted on a seasonal basis fell by 4%. On an annual basis, the decrease in these applications is 21%. The refinancing application index fell by 7% reaching its lowest level since 2000.

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The mortgage rates remained stable during the final week of April. The average rate on a 30-year fixed mortgages remained 4.49%. The average rate on FHA loans fell slightly from 4.20% to 4.17%. The rate on 5/1 adjustable rate loans marked an increase from 3.16% to 3.26%. The average rate on 30-year fixed jumbo loans went from 4.41% to 4.37%.

There are four major factors contributing to the further weakening of the spring season for mortgage loans. Despite the increasing economic growth, home prices increase at a faster rate compared to incomes and this makes housing unaffordable for many households. The rates increased insignificantly during the spring season, but they are over 1% higher compared to the same period of 2013. The new mortgage regulations work to block the access to home loans for many potential house buyers. The right inventory in the housing market pushes prices further up and this has a negative impact on demand.

Mortgage rates are expected to remain around the same levels while mortgage activity may increase in the coming months.



Mailynne serves as a content strategist and writer for mortgage.info. She is ahighly task-oriented strategic planner and experienced writer. Over the past 10 years, Mailynne has managedcontent for both large corporations, non-profits and businesses. She specializes in managing digital marketing,branding and web development content. Mailynne has worked with a variety of local, national and international organizations.

Contact: mailynne@mortgage.info

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