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Mortgage Demand Picks Up Ahead of Expected Rise in Rates

Mortgage rates held steady last week near what might turn out to be the most aggressive levels of 2010. Mortgage backed securities prices did not move too high or too low without quickly correcting, not much progress was made in any direction yesterday or for the last few weeks for that matter.

Early last week, the Mortgage Bankers Association released their weekly Mortgage Applications Index. The MBA survey covers over 50 percent of all US residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a look into consumer demand for mortgage loans. A rising trend of mortgage applications indicates an increase in home buying interest, a positive for the housing industry and economy as a whole. More home purchases can lead to more construction jobs and increased purchases of items to build a home. Furthermore, in a low mortgage rate environment, an increasing trend implies consumers are seeking out lower monthly payments which can result in increased disposable income and therefore more money to spend on discretionary items or to pay down other debt.

Mortgage Rates continue to hover around 5 percent, quite low by historical standards, but are well above the record lows seen in 2009. “I expect that rates will rise over the next few months as the Federal Reserve winds down its MBS purchase program, and this will likely lead to a decline in refinance volume." If you have been waiting to refinance or to buy, get out there and start the process before you miss the boat of the 5% interest rates.

Jerry Lampert

Olympic Area Manager USN - RETIRED

104 Tremont Street, Port Orchard, WA 98366

Office: 360-874-1239 E-mail: jlampert@repmtg.co m