According to the Mortgage Bankers Association, driven by an increase in home purchases, mortgage applications increased for the week as buyers took advantage of record low mortgage rates.
The jump in home sales accounted for an 8.1% rise in mortgage applications after the holiday week placed by home buyers for the week ending January 6th.
Mortgage interest rates reached an average of 3.91% on the 30-year fixed rate mortgage, according to Freddie Mac.
The Mortgage Bankers Association stated that rates home buyers are locking in are a bit higher, averaging 4.11% on a 30-year fixed rate loan.
The discrepancy in rates is attributed to mortgage buyers with less than perfect credit obtaining mortgages at higher rates.
Often, lenders approve home mortgages for those able to borrow from banks and mortgage companies at higher rates as a result of credit issues.
The refinance share of applications grew only 3.3% for the week, but still makes up the largest percentage of mortgage activity, dropping to 80.8% of all applications by home borrowers.
The contracted interest rate on a 15-year fixed rate mortgage grew for the week to 3.40% on finalized transactions, with points decreasing to 0.37 from 0.50 a week earlier.
The average contracted rate on a 5/1 adjustable rate mortgage dropped to 2.90% from 2.91% a week ago.
Source: housingpredictor.com