FHA Fee Hike Prompts Surge in Purchase Applications

Apr 3 2013, 8:37AM The pending increase in FHA guarantee fees pushed applications for government-backed purchase mortgages up 7 percent butt the overall volume of mortgage activity dropped during the week ended March 29. There was a 4.0 percent drop in the Mortgage Bankers Association's (MBA) Market Composite Index compared to the week ended March 22 on both a seasonally adjusted and an unadjusted basis. Despite the surge in government-backed mortgage activity the overall volume of applications for financing home purchases was up only 1 percent on an adjusted basis from the previous week and up 2 percent on an unadjusted basis. The unadjusted Purchase Index was 4 percent higher than during the same week one year earlier. The Refinance Index decreased 6 percent from the previous week and the share of refinancing applications decreased to 74 percent of total applications from 75 percent the previous week. The Home Affordable Refinance Program (HARP) accounted for 28 percent of refinancing compared to 29 percent the previous week. "Total purchase applications increased last week, due to an almost 7 percent increase in purchase applications for government loans. This was likely driven by borrowers applying for loans prior to the scheduled increase in FHA premiums that took effect on April 1," said Mike, MBA's Vice President of Research and Economics. "On a year over year basis, purchase applications are up about 4 percent, in line with the trend we are seeing in home sales volumes. If you have any questions about refinancing or you are looking to purchase a new home or sell your existing home. Feel free to call me with any of your questions. Thank you Robert Vaughan "RobSavesTheOC"