Mortgage application activity surged during the week ending May 11, as global economic fears resulted in rates being pushed to new all-time lows, according to one industry group.
The Mortgage Bankers Association reports that overall application requests for new home loans and refinances spiked 9.2 percent on a seasonally-adjusted basis from a week earlier. Specifically, the Purchase Index dipped 2.4 percent, but this was offset by an increase in refinancing requests.
The refinance share of total applications rose to 74.9 percent from 72.1 percent a week earlier. As mortgage rates continue to drop to all-time lows, it appears that homeowners are capitalizing on these affordable rates to restructure their home loans into more favorable terms.
"A flare up of the sovereign debt troubles in Europe once again led investors to flee to the safety of U.S. Treasury securities last week," said MBA vice president of research and economics Michael Fratantoni. "As a result, mortgage rates have reached new lows in our survey, and refinancing application volumes picked up substantially as a result."
Rates at new lows
Specifically, the rate for a 30-year fixed-rate mortgage with a conforming loan balance averaged 3.96 percent, which is the lowest ever recorded. In addition, mortgage records indicate that the rate for a 30-year FRM jumbo loan dipped to 4.2 percent, also an all-time low.
Housing starts also on the rise
As conditions in the housing market and mortgage industry continue to stabilize, a number of different sectors from both areas are taking notice. As a result, the number of housing starts surged 30 percent in April from a year earlier, according to a report from the Department of Housing and Urban Development. Meanwhile, starts rose 2.6 percent from the previous month to an annual rate of 699,000 units.
Additionally, during the annual period ending in April, single-family home completions rose 20.1 percent to an annual rate of 651,000. A year earlier, the annual rate was at just 542,000.
Experts say that this increase in builder activity is the result of a rise in builder confidence, as a major number of prospective buyers are expected to finally make the transition to homeownership this year.