Mortgage Applications Increase Due to Sudden Home Purchase Interest

By Kyle Chezum Updated on 4/20/2011

For the first time in a while, over a month, to be exact, mortgage applications have increased.  Rising interest rates for the past several weeks killed early spring refinance activity, which greatly reduced the number of applications for mortgages submitted to major banks.  Now, this trend appears to be shifting, and without any major drop in mortgages rates.

The Mortgage Bankers Association, an industry trade group, reported that total refinance and purchase applications together increased about 5.3% this past week.  Most of this activity came in the form of a sudden uptick in home purchase mortgage applications.  Purchase mortgage applications increased by 10% from the week before, a startling jump that was gladly appreciated by the typically sullen real estate marketplace.

The new mortgage application activity could be a sign that homebuyers are becoming more willing to enter the market, which could potentially be a sign that potential homeowners are no longer turned off by the threats of home ownership that have become readily apparent in the past several years.  Decreasing home prices may have finally made the risk worth it.

Interest rates on 30 year fixed rate loans averaged 4.83% last week, a drop from the 4.98% level where they sat the week before.  Rates likely won't continue to decrease, but as spring comes on strong, there is a good chance that more homes will be purchased.