A greater number of people applied for a mortgage loan to purchase or refinance a home last week than the one that preceded it, continuing a recent wave of positive economic reports regarding housing.
According to the Mortgage Bankers Association, which released the report, applications for a mortgage to purchase a home jumped 10.5% while refinance applications experienced a strong 2.1% bump.
“It is a bit surprising to see an upswing in activity leading into a holiday weekend, as folks headed into the Labor Day way weekend typically are more concerned about cook-outs than mortgages, but interest rates have stabilized, which may have prompted the increased activity on the mortgage front,” said Bob Walters, chief economist of Quicken Loans, which is the nation’s largest online mortgage loan lender.
“Early on this week we are seeing some strong activity in treasuries, which has pushed mortgage rates lower. Paired with the excitement over falling oil prices, there may be some potential for a short-term rally in housing,” Walters added.
The real star of the report, however, is the Government Purchase Index, which consists largely of FHA loans. It surged 19.9% week-over-week.
“The ongoing credit crunch has the potential to stall any rallies in the housing market. Fortunately FHA loans, with their less stringent credit and equity guidelines, have stepped in to help folks obtain financing who may have otherwise been turned away,” said Walters. “The FHA loan will continue to gain prominence in the current credit environment.”
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