Mortgage Applications on the Rise

For the eighth week in a row, the number of mortgage applications has steadily increased. In a June 10th report from trusted real estate and finance advocate, Mortgage Bankers Association, mortgage applications are currently up 9.3% from the week prior.

Housing Demand Creates Higher Mortgage Applications

The Market Composite Index, which measures the amount of mortgage loan applications, saw a seasonally adjusted increase this week of 9.3% from the week prior and an unadjusted increase of 20%. Impressively, the unadjusted Purchase Index also saw a rise of 13% from the previous year.  

“Fueled again by low mortgage rates, pent-up demand from earlier this spring, and states reopening across the country, purchase mortgage applications and refinances both increased. The recovery in the purchase market continues to gain steam, with the seasonally adjusted index rising to its highest level since January. Purchase activity increased for the eighth straight week and was a notable 13 percent higher than a year ago,” according to Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. 

As quarantines are gradually lifting across the country, there has been a significant increase in the number of mortgage applications received nationwide. This increase potentially indicates a boost in buyer confidence. Americans are currently seeing record-low mortgage rates, which is creating a powerful incentive for many to buy. Not to mention, new remote options for purchasing a home are putting consumers at ease and making the home buying experience easier than ever.

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How to Get a Low Interest Rate on Your Mortgage

On Thursday, June 11th, mortgage interest rates hit a national all-time low at an average of 3.21%, according to the Freddie Mac Primary Mortgage Market Survey published that same day. This historically low rate is making it the ideal time right now for approved buyers to purchase a home. But, what factors are taken into consideration when you are trying to apply for a mortgage loan? 

According to Business Insider, there are four main factors that are taken into account when you are trying to score the lowest possible mortgage rate: credit history, optimizing your debt-to-income ratio, finding the right lender for you, and researching whether you qualify for any promotions, discounts, or federal or state programs. 

The first thing that is taken into consideration is your credit score.  When it comes to your credit report and securing your ideal mortgage rate, payment history and account balances are two heavily weighted factors. If you are paying your bills on time and maintaining a lower account balance on your credit cards, these factors will increase the likelihood of you receiving your ideal mortgage rate. Additionally, if you are able to keep your debt-to-income ratio within the ideal range by paying down any higher outstanding debts, this will play a big part in getting you closer to your mortgage rate goal. 

The last two components of helping you to acquire your dream mortgage rate are finding a lender that best fits your needs and inquiring about whether you qualify for lower rates, promotions, or any federal or state programs. The wonderful thing about these last two components is that they really go hand in hand. When you are shopping and researching for the best mortgage for you, a great lender is going to do everything they can to help you secure the best rate and find any programs that suit your unique needs.   

Woman doing paperwork while looking at something from her phone. A key and small model home site on the table.

Should You Sell Your House?

After seeing astronomically low rates, it’s no surprise that many people are looking to buy a new home. But does that mean it’s the right time for you to sell? Due to increased demand following a slower buying season earlier this spring, an increase in the number of mortgage applications is a good sign that people are ready to buy. Throughout the spring of 2020, many eager homebuyers and sellers put their plans on hold due to economic lockdowns in response to the ongoing COVID-19 pandemic. According to the National Association of Realtors®, this led to the most significant decline in home sales in the United States during April since July 2010. 

Although the number of home sales may have declined throughout April, a whopping 56% of the homes sold during April were actually on the market for less than 30 days. The number of available homes for sale throughout April was actually down 19.7% from the previous year, which pinpoints that demand is much higher now than this same time last year. Housing prices during April also showed a 7.4% year-over-year increase, which is excellent news for anyone looking to sell right now for a comparatively hefty profit. For buyers, limited housing purchase options make the market incredibly competitive right now, and sellers are sure to reap the benefits. 

On the other hand, if you love your current home, now might be the perfect time to consider refinancing. In the June report mentioned earlier from the MBA, there was also a noticeable 11% increase in the refinance index this week, or the number of refinancing applications received. This increase suggests that current homeowners are taking notice of these record-low interest and mortgage rates, and they are interested in refinancing.

According to the Federal Reserve in a press conference held on Wednesday, June 10th, 2020, there is no foreseeable intention to raise their benchmark interest rate, and these low rates could continue into as late as 2022 as a result.

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About the Author

Before opening On Q Financial in 2005, John Bergman originated and funded 450 units a year as a loan officer. He founded the company with just $1M of personal life savings—committed to his vision for building the best independent mortgage organization in the industry.

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