Recent home buying trends are showing that there are more home loan applications right now than there have been in the past few months. Along with that rise in home loan applications, interest rates on home loans have dropped below 5 percent on a 30-year fixed mortgage, according to one industry group.
The increase over the past few weeks marks approximately an 8 percent increase in mortgage applications since the previous year. This is good news, as the housing market around the country has been hit pretty hard during the current economic crisis. This increase suggests that the housing market is starting to stabilize, after having been in a slump for the past three years.
Still, there is always the possibility that we may not be entirely out of the woods. Some argue that the government programs, such as the new home buyer credit, have propped up the market, and that the market will turn sour again once the program expires at the end of November. There is talk in Washington of trying to extend the program well into 2010.
The rise in the past few weeks comes on the heels of an unexpected rise in the sale of previously owned homes in September, according to statistics provided by the National Association of retailers. Previously owned home sales were at their highest levels in three years, in part because consumers are scrambling to meet the November 30 deadline.
In addition to the new home buyer tax credit, there are other factors that have contributed to the rise in new home loan applications, as well. Not the least of these is the drop in interest rates.
Along with those new home applications, rates have dropped significantly. The average rate on a 30-year fixed mortgage was 4.97 percent at the end of October. While this was still higher than the low of 4.61 percent set in March of this year, these rates are well below the 6.47 percent average of just one year prior.
Refinancing is also increasing, by almost 15 percent in October. These low interest rates are, at least in part, responsible for the increase in refinancing loans.
