Mortgage purchase, refinance applications on the rise

08.20.09
By Lewis Green

It seems that the U.S. housing market can't make its mind up as a new report finds that last week's mortgage applications for both purchase and refinance increased again after falling the week before.

According to figures from the Mortgage Bankers Association's (MBA) weekly Mortgage Applications Survey for the week ending August 14, mortgage applications increased 4.8 percent over the previous week and 25 percent over the same time last year.

Last week's increase comes after applications had fallen 3.5 percent for the week ending August 7 and had increased 4.4 percent the week prior.

The MBA says refinances have seen a similar see-saw effect. The most recent figures show that refinances increased 6.9 percent - gaining back almost all of the 7.2 percent drop off the Refinance Index saw the previous week.

"The large swings in mortgage rates over the past month have resulted in see-saw like activity in the Refinance Index," says the MBA. "By contrast, the purchase activity has not been deterred by interest rate volatility, and has continued to trend gradually upward."

Perhaps driving the increase in purchase and refinance applications has been the falling interest rates as both the 15-year and 30-year fixed rates fell last week. But Brad Geisen, president and CEO of Foreclosure.com, says that falling prices may be the biggest factor for people looking to new mortgages.

"Probably the biggest driving factor for home purchasing right now is price," he told Reuters. "During the housing boom, a lot of first-time home buyers were squeezed out of the market, but now property values have come down enough where they can afford it."

Geisen cites the government's $8,000 tax credit for first-time home buyers as a major factor in an interest in home buying, according to the wire service.

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Applications for mortgage purchase and refinance are up