Housing Market Welcomes Lower Interest Rates With Open Arms
Amid a worse-than-expected employment report, mortgage applications, and refinancing activity climbed higher as interest rates retreated. For the week ended January 10, 2014, applications for home loans surged 11.9 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 11 percent from the previous week. Meanwhile, the Purchase Index gained 12 percent to return to mid-November 2013 levels.
Overall, the refinance share of mortgage activity accounted for 62 percent of total applications, compared to 63 percent a week earlier. Interest rates have been moving higher in recent months, but a disappointing jobs report last Friday 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.