Is the Mortgage Market Finally Turning the Corner?
The mortgage market managed to post a second week of gains this month. In the latest update from the Mortgage Bankers Association, for the week ended May 9, applications for home loans increased 3.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index gained 3 percent.
Other areas of the mortgage market also showed improvement. The Refinance Index jumped 7 percent from the previous week to its highest level in about a month. The unadjusted Purchase Index also edged slightly higher, but dipped less than 1 percent on a seasonally adjusted basis. As the chart above shows, applications have struggled to gain momentum for a sustained period since the housing bubble collapsed.
Although interest rates remain near historic lows, homebuyers are being selective as home prices continue to climb higher. CoreLogic recently reported that home prices in March jumped 11.1 percent from a year earlier, while the latest S&P/Case-Shiller reading surged 12.9 percent on an annual basis.