Mortgage applications drop steeply on higher interest rates
Posted by on December 23, 2010
A six-month high in mortgage rates sent loan applications tumbling to their lowest level in six weeks.
The Mortgage Bankers Association (MBA) said Wednesday that mortgage loan applications dropped 18.6 percent in the week that ended Dec. 17, while refinancing plummeted 24.6 percent, the sixth straight week of declines and its lowest level since April 30.
“Refinance application volume dropped sharply this week as mortgage rates held near six-month highs,” said Michael Fratantoni, MBA’s vice president of Research and Economics.
The average interest rate for 30-year fixed-rate mortgages increased to 4.85 percent from 4.84 percent, while 15-year fixed-rate mortgages increased to 4.22 percent from 4.21 percent, after hitting historical lows over the past several months.
The refinance share of mortgage activity decreased to 72.3 percent of total applications from 76.7 percent the previous week, the lowest refinance share observed in the survey since early June.
The purchase index decreased 2.5 percent from one week earlier for the second straight time, with applications changing little over the past month, a sign that home sales will remain weak during the next several months, Fratantoni said.
The four-week moving average, which smooths the volatile weekly figures, was down 9.8 percent.
Tax Deal Has Home Owner Benefits
Posted by on December 22, 2010
Home owners were among those who benefited from the tax compromise that President Obama signed last week. Among the most home owner-friendly provisions are:
Deductions for private mortgage insurance: The agreement extends through 2011 a provision allowing home owners to deduct mortgage insurance premiums. To qualify for the full deduction, homeowners must have an adjusted gross income of $100,000 or less. Taxpayers with AGI of $100,000 to $109,000 can claim a partial deduction. Borrowers can’t deduct mortgage premiums on home loans that closed before 2007.
Tax credits for energy-efficient home improvements. Home owners who install insulation, new windows or other energy-saving improvement in 2010 are eligible for a tax credit worth 30 percent of the cost up to a lifetime maximum of $1,500. Improvements must be bought and installed by Dec. 31. Those who delay improvements to 2011 still get a tax credit, but it is capped at $500.
Source: USA Today, Sandra Block (12/21/2010)
