Applications For Florida Mortgage Loans Rise

Florida mortgage applications rose last week for the fourth out of the past five weeks, despite a rise in long-term borrowing costs to their highest level since early February.

The Mortgage Bankers Association’s Florida mortgage application index rose 1.6 percent to a seasonally adjusted 686.2 in the week ending May 18.

It was the highest reading since the week of March 9 and well above the volume recorded in the same week a year earlier.

Applications for home purchase and Florida refinance activity climbed in the past week. Borrowing costs also climbed across the board.

Average 30-year fixed-rate Florida mortgages, excluding fees, rose 0.10 percent to 6.23 percent from 6.13 percent the prior week, the biggest weekly increase this year.

While this increase was just below the peak of 6.24 percent reached in the February 9 week, long-term borrowing costs have held an extremely narrow (and low) range between 6.03-6.29 percent all year.

In the same week a year earlier, 30-year Florida mortgage rates averaged a significantly higher 6.61 percent.

The MBA’s seasonally adjusted purchase index climbed 1.3 percent to 438.1 in the week ended May 18. The group’s refinancing applications index rose 1.9 percent to a seasonally adjusted to 2,154.7.

New home sales figures on Thursday and existing home sales data on Friday will be carefully scrutinized by analysts and investors for clues on the state of the Florida housing market.

Many analysts say the historical tie between rising home loan applications and increasing home sales has loosened.

“Home mortgage applications are probably being boosted by tighter lending standards, with applicants being rejected and reapplying,” UBS wrote in research before the MBA data were released.

While applications have been rising, home sales have been sluggish early in the spring selling season, when warmer weather and the end of the school usually stimulate house shopping.

“One possibility, we think, is that marginal home buyers, that is, people who think they may not get a loan at all or at least a [Florida home mortgage] on acceptable terms, are making multiple applications in order to boost their chances,” added Ian Shepherdson, chief U.S. economist at High Frequency Economics.

Earlier this month, the National Association of Home Builders said home builder confidence sank in May as lenders made it more difficult for borrowers to qualify for mortgages and order cancellations mounted.

SOURCE: Reuters