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Declines in Mortgage Applications, Home Value Perceptions

Phil Hall
Feb 14, 2018
Baltimore Row Houses Pic

Mortgage applications and homeowner perceptions of property values were both down this week, according to a pair of new data reports.
For the week ending Feb. 9, the Mortgage Bankers Association’s Market Composite Index dropped by 4.1 percent on a seasonally adjusted basis and dropped by 2 percent on an unadjusted basis from the previous week. The seasonally adjusted Purchase Index decreased 6 percent from one week earlier, while the unadjusted index fell by 3 percent, although the latter was 4 percent higher than the same week one year ago. The Refinance Index decreased 2 percent from the previous week, but the refinance share of mortgage activity increased to 46.5 percent of total applications from 46.4 percent the previous week.
Among the federal programs, the FHA share of total applications decreased to 10.1 percent from 10.4 percent the week prior while the VA share of total applications remained unchanged at 10.1 percent and the USDA share of total applications increased to 0.8 percent from 0.7 percent.
Separately, new data from Quicken Loans recorded a widening gap between an appraisal value and homeowner expectations widened in January, reversing an eight-month trend where the conflicting opinions were growing closer. The National Quicken Loans Home Price Perception Index showed appraisers valued homes an average of 0.6 percent lower than what owners estimated, even though the national level of appraisal values were up 0.46 percent from December to January; year-over-year home value growth was 7.03 percent last month.
“The appraisal is one of the most important pieces of data in the mortgage process,” said Bill Banfield, Quicken Loans’ executive vice president of capital markets. “Often the entire transaction hinges on the appraisal showing a number similar to what the homeowner estimated at the beginning of the process. If the appraisal is lower it could mean the homeowner needs to bring additional cash to close, or the loan may need to be reworked. It’s very promising to see the homeowner estimate and the appraiser opinion so close together.”
Feb 14, 2018