Housing Market Enjoys Rebound From Lower Interest Rates
Despite expectations for the Federal Reserve to keep dialing down bond purchases, mortgage applications and refinancing activity increased as interest rates fell. For the week ended January 17, 2014, applications for home loans gained 4.7 percent on a seasonally adjusted basis from one week earlier, according to data from the Mortgage Bankers Association.
There have only been a handful of increases over the past eight months as the housing market is starting to return to a more sustainable pace, but the Refinance Index also jumped 10 percent from the previous week. However, the Purchase Index declined 4 percent and was 15 percent lower than the same week one year earlier.
Overall, the refinance share of mortgage activity accounted for 64 percent of total applications, compared to 62 percent a week earlier. That is the highest level in a month. Interest rates have rebounded higher in recent months, but a disappointing jobs report earlier this month could keep rates under control for the near future as the Federal Reserve maintains a loose monetary policy. In December, the U.S. economy added only 74,000 jobs, the smallest monthly gain in three years and a far cry from the 200,000 jobs estimated by economists.