Refinance requests have slipped further under purchase request in terms of mortgage share compared to this time last year, according to data from the Weekly Mortgage Applications Survey, a Mortgage Bankers Association (MBA) report. Chief MBA Economist Mike Fratantoni says many buyers are more encouraged than current owners to enter the real estate market due to current rates and solid economic and employment data from recent U.S. Bureau of Labor Statistics reports.
The National Association of Realtors (NAR) forecasted the sales of existing homes in 2014 to finish around 4.94 million. While this represents a three percent decrease from the 5.09 million sold in 2013, the NAR expects sales of 5.30 million in 2015. The group also noted the continued increase for existing-home prices across the US. In 2014, the national median price was around $208,000, which represented an increase of 5.6 percent compared to 2013. And, prices for existing homes increased 11.4 percent between 2012 and 2013. The NAR expects prices increases for existing homes to range from four to five percent in 2015, which would make four straight years of price increases for existing homes.
Meanwhile, the demand for mortgage refinancing continues to decrease. Much of this drop is due to stricter applicant requirements, which include measuring the borrower’s debt over income ratio, rules applying to missed payments or late payments, and requiring the applicant to document all income sources, even gifts and other monetary contributions. Credit score requirements increased, eliminating many potential applicants from the market. As the interest rates for mortgage rates keep rising while lending requirements remain strict, mortgage refinancing demand will likely remain low.