Morning Briefing: Mortgage applications dip 1.3 per cent

by Steve Randall12 Nov 2015
Mortgage applications dip 1.3 per cent
The weekly survey of mortgage applications has shown a 1.3 per cent decline for the week ending November 6. The Mortgage Bankers Association’s Market Composite Index decreased on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index decreased 2 per cent; the Refinance Index decreased 2 per cent; the seasonally adjusted Purchase Index increased 0.1 per cent; the unadjusted Purchase Index decreased 3 per cent compared with the previous week and was 18 percent higher than the same week one year ago.

The refinance share of mortgage activity increased to 59.8 per cent of total applications from 59.7 per cent the previous week; ARM share decreased to 6.6 per cent; FHA share increased to 14.1 per cent from 13.2 per cent; VA share decreased to 10.9 per cent from 11.9 per cent; USDA share remained unchanged from 0.7 per cent the week prior.
This is stopping renters becoming homeowners
Renters who are keen to cash in on the lower cost of a mortgage compared to increasing rents are being held back by downpayments. As home prices increase, rapidly in some markets, the size of downpayments remain out of reach of many would-be buyers. The rising cost of renting is squeezing budgets, making saving for downpayments even more difficult. Zillow’s analysis found that average renters spend 30 per cent of income on rent but in some markets the ratio is staggering. San Jose, San Diego, Miami-Fort Lauderdale, San Francisco and New York-Northern New Jersey all swallow an average of above 40 per cent of income and Los Angeles-Long Beach-Anaheim’s average is 48.8 per cent.

With these large burdens on income together with downpayments that can be as much as $50,000 for an average home it has created a growing issue for the housing market and tricky decisions for first-time buyers: “Using a smaller down payment is an option, but often comes with the added cost of mortgage insurance. Knowing this, it's no wonder that many current renters are waiting longer to buy a home and are turning to alternate sources, including friends and family, to help them scrape together a down payment” said Zillow’s chief economist Dr Svenja Gudell.
Houston home sales down 10 per cent
Home sales in Houston fell by just over 10 per cent year-over-year in October to 5,873 sales. However this was expected by the Houston Association of Realtors due to the high level of sales a year earlier and the subsequent downturn of the oil sector impacting the region. All pricing sectors and property types were affected although prices rose to the highest level ever for October reaching $271,648 on average, a rise of 3.3 per cent; and a 6.6 per cent jump in median price to $205,000.


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