Florida Mortgage Rates Rise; Florida Mortgage Applications Fall

What goes up… must fall to its lowest level since April?

That’s the scoop on mortgage applications, as reported by Reuters on November 3. As interest rates continue to rise across the board - and have reached a 16-month high - mortgage applications fell 4.8 percent this week on the Mortgage Bankers Association index. With a index of 646.7 to end the week, the national application volume is at its lowest point since a reading of 644.5 nearly seven months ago.

While applications for 2005 are still expected to set record highs, experts believe the increased borrowing costs, evidence of slower appreciation and growing inventory in recent months will finally quell the demand. With mortgage rates averaging between 6.21 and 6.31, their highest level since June 2004, new purchases and refinancings will slow significantly in the next two months and throughout 2006, economists predict.

The Association’s index, which is considered among the most accurate and current gauges of U.S. home sales, saw significant drops in both home purchasing and refinancing. Home sales fell by 6.2 percent to 437.6 from the previous week’s 466.4, a percentage that is even greater at 7.6 when seasonally adjusted. The MBA’s refinancing index decreased 2.8 percent from last week and a telling 19.1 percent lower than this point a year ago.

Boosted by record activity in the first three quarters of 2005, existing home sales are expected to increase 4.8 percent from 2004, while new home purchases will climb 8 percent, according to the National Association of Realtors. Locally, Florida home loan activity remained strong in September, as the market’s growth appeared to top out. Now the agency projects that sales in Florida and other high-growth areas may be slowing. Existing and new home purchases will drop by 3.5 and 4.5 percent, respectively, in ‘06, the Realtors say.