Florida Mortgage Applications Rise in Past Week

Applications for Florida home loans rose in the last week, while the highest adjustable-rate mortgages in over six years put another nail in the coffin of the once-torrid sector.

That’s the report from the Mortgage Bankers Association, which says that home mortgage applications rose by a seasonally adjusted 1.3 percent the week ending August 31.

Average 30-year Florida home loan rates rose 0.01 percent, to 6.42 percent, during the week.

One-year adjustable rate mortgage (ARM) rates also rose 0.01 percent, but at 6.52 percent, remain above longer-term borrowing costs.

These risky, adjustable mortgages had fueled the Florida real estate boom by enabling borrowers to acquire homes they might not otherwise be able to afford.

Now the squeeze is on homeowners - with many being pushed into default because payments surged on their Florida home mortgage reset dates.

ARMs made up just 12.6 percent of total Florida mortgage loan applications last week, down from 15 percent the prior week. At their recent peak, more than 30 percent of new loans were ARM products.

In the week ending August 24, the industry group said the one-year ARM rate surged by nearly 0.70 percent, the largest weekly jump on record.

The ARM share of Florida mortgage activity is gradually being whittled down as the affordability product becomes unaffordable.

The last time the adjustable-rate mortgage share was over 30 percent was in early June 2006, when it reached 30.7 percent.

The MBA also said its home purchase index rose 0.4 percent in the latest week, while overall Florida mortgage refinancing rose 2.3 percent.

The purchase and Florida refinancing gauges are subcomponents of the overall mortgage applications index.

All three of these weekly mortgage indexes were down by more than 1 percent on a four-week moving average, which smooths out volatility.

SOURCE: Reuters