The Mortgage Bankers Association surveys multiple mortgage banks every week and then releases all of the data.
The most recent survey, discussed in this National Mortgage News article, is particularly interesting.
Here is just some of the data:
- Purchase applications are at an 11 year high.
- Refi applications are 106% higher than last year at this time.
- Refi applications account for 63% of ALL applications.
- Adjustable Rate Mortgages make up only about 3% of all mortgages.
- The average rate for conforming loans under $510,400 was 3.3%.
- The average rate for high balance and jumbo loans was 3.7%.
Here are a few observations regarding that data.
- No industry can survive when it is dependent upon constantly decreasing rates. With 63% of the mortgage industry dependent upon refis, we will see a meltdown within the industry when rates bottom out or go up.
- The American economy can’t survive on constantly falling rates. These falling rates are providing an enormous stimulus for the American economy, fostering a massive surge in both refis and purchases. Refis make the mortgage industry wealthy and put cash in borrowers’ pockets which is then inevitably spent elsewhere, while purchases make sellers, builders, the construction industry, Realtors and the mortgage industry wealthy. This has been taking place off and on now since the late 1980s, and it obviously can’t go on forever b/c rates have to bottom out or go up at some point. That reckoning is getting closer and closer, and it won’t be pretty when it comes.
- Mortgage industry can’t handle volume. I mention this often but it is very difficult for the mortgage industry to simply ramp up to meet additional volume. This is b/c ramping up requires so much additional capital and training. So delays will continue.
- The average rates are considerably higher than what I quote every day. When times are good like this, many lenders get away with quoting amazingly high rates.
- The last peak in purchase applications was in 2009 – after the meltdown. I found it very interesting that purchase applications were still enormously high in the midst of the “Great Recession.” This shows that the demand for housing seems to remain relatively strong no matter what happens to our economy. I remember watching Realtors and loan officers quickly shift their methods of business though to cultivate new business in that changed environment. The people who did not change quickly, suffered greatly.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167