Applications surge for home-purchase loans; tax credits expire April 30
This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.
With special tax credits set to expire at the end of April, applications for loans to purchase homes are at their highest level in five months, a mortgage trade group said Wednesday.
Releasing a survey for the week that ended Friday, the Mortgage Bankers Assn. said its seasonally adjusted purchase index rose 6.8% from a week earlier.
Michael Fratantoni, the group’s vice president of research and economics, noted that a similar surge took place in October, when an $8,000 credit for first-time buyers was set to run out. As an economic stimulus measure, Congress extended the program through April 30 and added a $6,500 tax credit for some trade-up buyers.
By contrast, the mortgage group’s index of home-loan refinancings fell by 1.3%.
Refinancings are sensitive to slight changes in mortgage interest rates, which have edged higher recently. One reason for that is the expiration at the end of March of a Federal Reserve program to buy $1.25 trillion in mortgage bonds backed by government-controlled Freddie Mac and Fannie Mae.
The refinance share of mortgage activity decreased to 63.2% of total applications from 65.0% the previous week, the Mortgage Bankers Assn. said. That’s the lowest refinance share since the week ending Oct. 23.
In a separate survey that appears to bode well for housing, an association of mortgage insurers said borrowers with private mortgage insurance who caught up on their overdue home loans outnumbered people who fell behind. It was the first time that happened in almost four years, Bloomberg News reported.
Private mortgage insurance typically covers loans made with low down payments, which are at greater risk of default, especially when home prices fall. In a survey of these insured loans, the Mortgage Insurance Cos. of America said 68,675 went into delinquency in February while 80,758 were brought current.
-- E. Scott Reckard