Though much of the news in the mortgage market has been bleak as of late, with the mounting losses and foreclosures, and continuing fallout from the subprime-mortgage lending fiasco, the amount of application for new mortgage applications is on the rise as many try to refinance existing mortgages with lower rates or to get out of old mortgages to avoid the now-reset and much-higher adjustable rates.
The Mortgage Bankers Association said last week that the number of mortgage applications increased 48.1% when seasonally adjusted in the week that ended March 21 from the previous one. Applications for refinancing existing mortgages was up more than 82% from the week prior, while applications for new mortgages to buy homes was up more than 10%. Applications overall have increased more than 40% from last year.
The increasing volume of borrowers trying to get new mortgage or refinance old ones comes as the Federal Reserve has continued to lower its rates, and mortgage interest rates have been falling along with them. The MBA said an average 30-year fixed-rate mortgage carried a rate of 5.74% the week ending March 21, down from the week prior's 5.98% rate.
Rates on mortgages for less than 30 years dropped as well, though not as much. The data also showed that fewer borrowers are opting for adjustable rates and instead preferring to take a fixed rate. Many blame the adjustable-rate mortgages, along with careless lending, for getting the U.S. into the housing mess, as borrowers took out mortgages that they could not afford once the rates reset higher.