Homebuyers Can Still Take Advantage Of Low Mortgage Interest Rates

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The Federal Savings Bank shares the results of the latest weekly mortgage applications survey and its implications for the housing market.

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While mortgage rates adjusted upward recently, the increase has not been enough to move them out of the bounds of historical lows.

The Federal Savings Bank reminds readers that as the housing market enters the winter months, buyers can continue to take advantage of historically low interest rates

While now is a good time to buy, the Mortgage Bankers Association's Weekly Mortgage Application Survey showed applications decreased slightly by 0.9 percent on a seasonally adjusted basis for the week ending Nov. 7, demonstrating some potential homeowners worry regarding the market. On an unadjusted basis, the Market Composite Index fell 2 percent compared to the previous week.

Purchases increase
Though the MCI indicated a slight dip in applications, mortgage rates remain relatively stable within historical lows, and people are still out there buying homes. The MBA's seasonally adjusted Purchase Index rose 1 percent for the week ending Nov. 7, indicating consumers still see this as a good time to buy.

"The buyers realize that they're never going to get this kind of low interest rate environment," said the National Association of Home Builders Chief Economist David Crowe, according to Reuters.

Applications related to rates
The slight tip up in mortgage rates may have worried some potential home buyers and be partially responsible for the small decrease in applications. The average contract interest rate for 30-year fixed rate mortgages with conforming loan balances increased 0.02 percent for the week. Rates for 30-year FRMs with jumbo loan balances stayed the same with a small increase in points, and the average rate for Federal Housing Administration-backed 30-year FRMs rose 0.06 percent with a decrease in points.

The average contract rate for 15-year FRMs remained the same with fewer points.

An expected rise
Many anticipated the slight increase in 30-year FRM conforming loan rates because of the Federal Reserve ending its economic stimulus program, Quantitative Easing. The Fed had been tapering the QE program for some time and ended it completely in October because it had faith in the strength of the U.S. economy, as report by Forbes on October 29th.

While mortgage rates adjusted upward recently, the increase has not been enough to move them out of the bounds of historical lows. The current interest rates are still considerably lower than in previous years, indicating home buyers, particularly first-time home buyers, should keep looking for that perfect house.

Seasonal dip not a step backward
Many are wary about the small rise in rates and dip in mortgage applications in recent weeks. However, the past two quarters demonstrated overall improvement in the mortgage industry, according to Trefis.com on November 10th.

Based on MBA data, there were an estimated $300 billion worth of mortgages originated during the third quarter, Trefis reported. This is an increase from the $297 billion in originations during the second quarter. Both quarters saw growth compared to the first quarter of 2014's $247 billion, the lowest volume of mortgage originations since the third quarter of 1997.

The loan origination growth seen throughout much of 2014 is expected to continue in the fourth quarter of 2014 as the economy improves.

Additional mortgage information
According to the MBA data, the refinance share of mortgage activity remained unchanged at 63 percent of total applications, so it is no surprise the Refinance Index also dipped 2 percent.

The number of FHA-backed mortgage applications increased to 9.6 percent from 9.5 percent the week before. The Department of Veterans Affairs share of total applications rose to 11 percent from 10.7 percent last week.

First-time home buyers interested in securing low-rate mortgages during this historically low rate period should contact the Federal Savings Bank, a veteran owned bank.

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