• Seasonally adjusted applications to purchase homes surged 23.6% for the week ending January 9th relative to a week earlier, a significant increase following the prior week’s 4.5% improvement.  The purchase applications index is 1.6% higher than the same time in 2014.  The week-to-week figures may be volatile, but the unadjusted 4-week moving average has improved steadily since early November when it was down 12.1% on a year-over-year basis to down just 0.6% this past week.
  • Despite the sharp increase, credit overlays and limited supply continue to constrain purchase application volumes.  However, sub-4% mortgage rates combined with new products offered by the GSEs and lower MI pricing by the FHA point to strong affordability in the spring market.

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  • The average rate for a conforming 30-year fixed rate mortgage as reported by the Mortgage Bankers Association fell 12 basis points to 3.89%, the lowest level since the week ending May 17th 2013.  The average rate a year ago this week was 4.66%.  At the current rate and median price, a borrower would save $46 per month, or an improvement in affordability of 5.2% relative to last year.

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  • This week’s readings suggest a solid improvement in mortgage applications and dovetails with the robust economic and affordability data as well as foot traffic figures from the last two months.  Stronger applications are one more signal pointing to a solid spring market.  However, the market would benefit from both income and inventory growth.
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