Themortgage sector is undergoing a transformation. Currently, interestrates are at a record low though the application rate has decreased.Refinancing volume, which forms a significant percentage of all themain applications, fell with a whopping 2% over a period of one week(Olick, 2016). When these trends have been seasonally adjusted, therecord shows that refinancing volume accounted for approximately halfof this year’s applications. However, mortgage applicationsincreased by 1% over one week and are believed to have been higher by10 percent for the same period the previous year.
Thedecision by the Treasury to leave their target rate unchanged havecreated a wave of concern among stakeholders about the growth of thesector globally, especially in Japan and Europe. Experts followingthe trend note that although refinance volume took a hit the previousweek, the year promises to be favourable for the sector. Other areasthat experienced changes include 30-years fixed-rate for mortgageinterest rates which are conforming to loan balances of $417000 orless (Olick, 2016). Additionally, there was a fall of 0.03% in thejumbo loan’s average rate.
Observersalso noted an increase in the average purchase loan which is anindication that there is strength in the higher end of the market.This is due to increase in houses for sale in high-end places. Thereis a general concession that this year’s home buying season is lessaggressive as compared to the previous three years (Olick, 2016). Asa result, homes take more time to be sold even those that are locatedin areas considered as hot markets. These trends noted, there arethose that believe that the market is not on a downward trend, but anormalizing phase to allow the market forces to come into effect. Therates will continue to fall for the week with very minimal changes inrates. However, there will be significant changes in upfront costswith real rates dropping with an eighth of a percentage.
Olick,D., (2016). Drop in refinancing pushes mortgage application by o.7%.Internet source.