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The reality of a purchase driven housing market is setting in as the refinance index failed to make much progress in Q1 2010 even as mortgage rates held below 5.00% (for the most part). On the bright side, purchase loan demand is now picking up as the expiration of the home buyer tax credit draws closer and closer (April 30). This confirms reports I get from the street. My own mother, a real estate appraiser, went from being marginally busy to super swamped in a two week period, with a broad majority of her business coming from purchase applications. My dad, a consistently busy loan originator, has been spending more and more time educating interested first time homebuyers and pre-qualifying borrowers. Beyond that, in the past week alone I have received a considerable amount of comments from Realtors, Loan Originators, and Appraisers that corroborate my family's feedback. Furthermore, it is likely that home buyers are nervous about rising interest rates, this sentiment is probably providing a proverbial "kick in the butt" to prospective home buyers. The time to act is now! ...

Lock desks got busy toward the end of last week as rates dipped and coverage on it picked up (at least on MND). We believe current mortgage rates are near what will turn out to be the lowest levels of 2010, this is the message we have been broadcasting on the Mortgage Rate Watch blog. With that in mind, given the fact that search traffic on that blog channel increased substantially last week....we wonder if borrowers might just be listening to our voice and taking advantage of rates below 5.00% while they are still available....

In the most recent report, loan application volume fell 10.7 percent. The Refinance Index decreased 10.1 percent from the previous week and the seasonally adjusted Purchase Index decreased 11.6 percent from one week earlier. ...

In the week ending November 20, 2009, new loan application activity decreased 4.5% as the Refinance Index fell 9.5% from the previous week. Offsetting some of the overall decline was a 9.6% increase in purchase applications. However, as refinance loans currently make up 71.7% of all mortgage applications, the rise in purchase activity was not large enough to counterbalance the overall Market Composite Index. The MBA also reported that the average rate on a conventional 30 year mortgage moved 0.01% lower to 4.82%....

In this week's release, which reports on loan application activity for the week ending November 6, 2009, demand for new mortgage loans increased 3.2% from one week earlier. The Refinance index rose 11.3% while the Purchase index fell 11.7%, its lowest level since December of 2000....

The Mortgage Banker's application survey covers over 50% of all US residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a look into consumer demand for mortgage loans. A rising trend of mortgage applications indicates home buying interest is increasing, a positive for the housing industry and economy as a whole. Furthermore, in a low mortgage rate environment, a trend of increased refinance applications implies consumers are seeking out a lower monthly payments which can result in increased disposable income and therefore more money to spend on discretionary items...or just an opportunity to pay down other debts like credit cards and car loans....