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 December 05, 2008

Mortgage Applications Double as Interest Rates Tumble
Last week, recent government bailouts led to falling interest rates, resulting in a 112.1 percent increase in mortgage applications on a seasonally-adjusted basis from the prior week.
Interest rates fell sharply in response to the Federal Reserve's announcement of its intentions to purchase mortgage-backed securities and debt from mortgage giants Fannie Mae and Freddie Mac. The MBA (Mortgage Bankers Association) reported that 30 yr. fixed-rate mortgages dropped from 5.99 percent to 5.47 percent. Rates on 15 yr. fixed-rate mortgages went down from 5.78 percent to 5.13 percent.

A large percentage of the applications received were for refinancing of loans, not purchases. Prospective buyers should keep in mind that today's rates are lower because lending industry standards are now stricter than ever before. Applicants lacking the proper equity that they need for approval (high FICO scores, sufficient down-payment, etc.) may find their applications rejected, rather than on the closing table.