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Mortgage Applications Rose, Volatility Continued in January

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Dec. 4 2020, Updated 10:53 a.m. ET

MBA mortgage applications rose 8.8% 

According to the MBA (Mortgage Bankers Association) survey, mortgage applications rose by 8.8% for the week ending January 22.

As a result, the iShares US Real Estate (IYR) rose by 3.0% as of January 27 over the past week.

 

Real estate stocks including Simon Property Group (SPG), General Growth Properties (GGP), Equity Residential (EQR), and the Macerich Company (MAC) rose by 3.0%, 4.6%, 1.5%, and 0.87%, respectively, over the past week as of January 27.

The refinancing index and purchase index also rose. After falling by 2.2% in the prior week, the purchase index rose by 5.0% for the January 22 week. The refinancing index rose by 11.0% for the week ending January 22—compared to 19.0% rise in the previous week.

For the week, the refinance share of mortgage activity fell to 59.0% of the total applications from 59.1% in the previous week.

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MBA 30-yr mortgage rate rose to 4.02%

MBA fixed 30-year mortgage rates with conforming loan balances of $417,000 or less rose 4.02% in the week ending January 22. It fell by 0.04% from 4.06% the previous week.

The MCAI (mortgage credit availability index) fell by 2.4% to 124.3 in December. The fall in the MCAI highlights that lending standards are tightening. An increase in the index indicates that credit is loosening. However, the fall in December was due to a technical problem with the implementation of affordable, low down payment loan programs.

Mortgage applications saw huge swings after regulatory change. The volatility continued since the beginning of 2016.

Rising home prices and limited inventory kept potential homebuyers away from purchasing a home. However, a recent rise in mortgage applications shows an optimistic picture about housing demand in the future.

Let’s see how optimism in housing demand boosted home prices.

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