Published: May 10, 2004
By: Don T. Nusmith
With refinancing and all home mortgage rates on the rise, submissions of mortgage applications have been increasing as rates follow suit, which is a seeming paradox in the home loan industry. This financial information was derived from interest rate reports released this week by Mortgage Bankers Association, an industry trade group. MBA's analysis of the adjusted market index indicates mortgage activity is up 4.4% despite bitter opinion of the dramatic and sudden increases thus far in mid-2004.
This rebound in more loan applications likely came from homeowners rushing to lock these historically low rates before they head even higher, according to analysts.
The refinancing index rose last week after dropping the previous five weeks. Last week there was a change up by 4.7 %.
Average mortgage rates (minus fees / 30 yr.) have risen 57 basis points since the end of April.
The FED has decided to leave the prime rate alone and allow the funds rate index to stay at 1%.
Mortgage activity has slightly decreased as rates start to creep up, but there has been no reduction in the number of new home loans at adjustable rates, which are
typically slightly lower than fixed rate 30 Yr. loans.
Bob Walters, an economist at Quicken Loans said: "While the strengthening economy is good news for the country as a whole, it also signals the Federal Reserve that the economy's need for extremely cheap money has passed...For those trying to decide whether to lock or float, I think the trend toward higher rates makes locking in savings now the prudent choice."
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