Mortgage Bankers Association: Home Loan, Refinance Demand Rising

by Karen Lawson
October 7th, 2009

The Mortgage Bankers Association’s weekly survey of home loan and refinance applications indicates stronger demand that could signal the end of rock bottom mortgage rates. The survey covering the week ending October 2 indicates that applications for home purchase loans were up 16.4 percent, seasonally adjusted to 13.2 percent. This figure remains about 2 percent less than one year ago.  Refinance applications rose to 18.2 percent, also seasonally adjusted, and the highest rate for refinance applications since mid-May.

FHA Providing Home Loan Opportunities for Challenged Borrowers

With the demise of sub prime lending, many homebuyers and homeowners who have little cash or home equity, and/or credit problems cannot qualify for mortgage loans at current mortgage rates. FHA has assumed the lion’s share of this market, as indicated by the MBA survey. For the week ending October 2, FHA home loan applications have risen 14.4 percent, the highest level reported since the survey’s inception in 1990.

Current Mortgage Rates and Lenient FHA Guidelines: Is the Party Ending?

This may be great news for homebuyers and homeonwers wishing to refinance, but as FHA assumes more risk by insuring growing numbers of loans,  it may be forced to further tighten its lending requirements in an effort to avoid heightened risk. Recent concerns about FHA reserves falling near the 2 percent minimum required by Congress have led to raising the minimum down payment for FHA home loans from 3.5 to 5 percent, and reducing loan amounts for cash out refinances and cash payouts for reversee mortgages. If FHA guidelines are tightened further, first time buyers and others may be out of luck, espcially if mortgage rates start rising.

FHA Resources for Homewners and Homebuyers

If you’re buying for a home, or refinancing your current home loan, get quotes for FHA home loans from our lenders. If you need information about preparing to buy a home, paying off debt or learning about local housing programs in your area, please contact a HUD approved housing counselor for assistance.  

To Buy or Not to Buy: Are You Ready to Buy a Home?

Home ownership is traditionally viewed as a sign of achievement and financial stability, but it is also likely to be the largest financial obligation you’ll ever have. Don’t be pushed into buying a home you’re not ready to own. Taking time to save for a down payment, establish or improve your credit, or stabilize your career can be worthwhile, particularly if you have doubts about buying a home right now. Attending a first time homebuyer class can help you understand the cost and responsibilities of home ownership. Don’t allow pressure from family or others to influence your decsion about buying a home. When you’re ready, you’ll know.

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