Mid-Week Mortgage Update

On Wednesday, the Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending December 12, 2008.  This shows that buyers are moving to take advantage of lower interest rates. In addition, homeowners are moving to refinance to lower rates on existing home loans.

The Market Composite Index, a measure of mortgage loan application volume, was 841.4, an increase of 2.9 percent on a seasonally adjusted basis from 817.7 one week earlier, which was revised from 796.8. On an unadjusted basis, the Index increased 2.9 percent compared with the previous week and was up 37.3 percent compared with the same week one year earlier.

The Refinance Index increased 6.5 percent to 4156.0 from the previous week and the seasonally adjusted Purchase Index decreased 4.5 percent to 286.1 from one week earlier. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 1.1 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.18 percent from 5.44 percent, with points decreasing to 1.13 from 1.24 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.93 percent from 5.08 percent, with points increasing to 1.34 from 1.26 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs decreased to 6.63 percent from 6.76 percent, with points increasing to 0.3 from 0.26 (including the origination fee) for 80 percent LTV loans.

Besides slashing its rate for loans to banks, on Tuesday the Federal Reserve reiterated its intent to its plans to buy up mortgage, credit-card and student-loan debt, according to MarketWatch.com. This should start to have an impact of mortgage rates in the first quarter of 2009. "These actions can directly lower mortgage interest rates and the interest rates on other types of consumer debt," said Dean Baker, co-director of the Center for Economic and Policy Research. "In effect, the Fed is stepping in as a very big actor with the explicit goal of driving down these interest rates. If it is prepared to buy enough debt, it can drive these rates down."

If you are interested in taking advantage of the lower rates in 2009 by buying a Flagstaff home, now is the time to start establishing a relationship with a good Flagstaff mortgage lender. Visit this Flagstaff real estate agent's website to find recommended local lenders: Flagstaff mortgage brokers.