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Mortgage Applications Higher … Along With Rents!

Phil Hall
Feb 17, 2016
Mortgage applications and refinance activity were on the rise, according to the latest housing data

Mortgage applications and refinance activity were on the rise, according to the latest housing data, while rental rate increases appear to create new burdens on residents in the South and the West.

On the homeownership front, the latest Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey determined that the Market Composite Index increased 8.2 percent on a seasonally adjusted basis and 10 percent on an unadjusted basis from one week earlier. The seasonally adjusted Purchase Index decreased four percent from one week earlier, but the unadjusted index increased two percent compared and was 30 percent higher than the same week one year ago.

But the real activity was on the refi side of the business. The Refinance Index, Conventional Refinance Index and Government Refinance Index increased 16 percent from the previous week, reaching their highest levels since January 2015, while the refinance share of mortgage activity reached 64.3 percent of total applications, up from 61.2 percent in the previous week and now at its highest level in a year.

The government loan programs registered mixed results: the FHA share of total applications decreased to 11.5 percent from 12.3 percent the week prior, while the VA share of total applications increased to 11.7 percent from 11.1 percent and the USDA share of total applications remained unchanged at 0.6 percent.

Helping the cause of homeownership was the steep rise in rents in many markets. A new study from the Altisource subsidiary RentRange found markets in Florida, Louisiana, Arkansas and Tennessee accounting for eight of the top 10 increasing rental markets, while metro areas in California, Washington and Hawaii occupied nine spots on the top 25 list. Leading the nation for rent increases was Florida’s Cape Coral-Fort Myers market, which registered a 25.4 percent year-over-year rental rate increase in the fourth quarter of 2015. In a surprising contrast, the pricey Bay Area corridor of San Francisco-Oakland-Fremont only saw a 7.7 percent increase for the same period.

“The single-family rental market remains strong across the U.S. as the homeownership rate continues to decline and a higher percentage of the population migrates to rental housing,” said Walter Charnoff, CEO of RentRange. “As the real estate market continues to improve, we are seeing significant rental price increases in many markets, which bodes well for investors in this space.”

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