In Strong Economy, Fixed Rate Mortgages Rise

The week may have been shortened by Veteran’s Day, but mortgage loan application volume held steady, according to the Mortgage Bankers Association, declining just 0.6% on a seasonally adjusted basis from the previous week.

The Purchase Index increased 2.6% on a seasonally adjusted basis, while the Refinance Index decreased 5.4% from one week earlier. What were the reasons for these numbers? Bob Walters, Chief Economist of Quicken Loans (the nation’s largest online lender) explained.

“Moderation of fuel prices and sturdier employment figures are driving the economy forward,” he said. “Higher short-term interest rates are causing homeowners to distance themselves from the volatility of adjustable rate mortgages, preferring the sanctuary of a fixed rate program instead.”

If earlier reports are correct, and the Florida home loan market is slowing down, then those already living in The Sunshine State - or hoping to move there - are also more likely to choose interest rates that are fixed. They won’t wish to take the risk that any adjustable loans will sky-rocket out of control.