Credit Scores Are up Slightly and Mortgage Rates Remain at Historically Low Levels, According to Mortgage LendersMortgage applications nearly doubled in the first quarter of 2012 compared with the same period last year, according to a recent report from MortgageMarvel. This is an indication that consumer confidence is increasing and people are taking advantage of low home prices and interest rates," said Rick Allen, of Mortgage Marvel.
Refinancing continues to be prevalent. The study reflected that loans to refinance an existing mortgage accounted for 54 percent in the first quarter of 2012 versus 61 percent of loans in the fourth quarter of 2011. The volume of applications to purchase homes in the first quarter was up 40 percent over the same period last year, which indicates that the housing market is picking up.
Applicant credit scores averaged 733 in the first quarter of 2012 compared with 716 in the same period in 2011, indicating that personal finances may be improving as well. The average median household income nationwide of mortgage applicants rose from $79,400 to $87,450.
Research data is compiled from loan applications submitted to lenders using Mortgagebot's online lending platform. Mortgagebot, which owns and operates Mortgage Marvel, licenses its technology to over 1,100 lenders nationwide to facilitate mortgage applications through every delivery channel -- consumer-direct via the Internet, in the branch or call center, or through professional loan officers. In 2011, more than 500,000 loan applications were submitted through Mortgagebot's online lending platform.
This rich database is used for analyzing interest rate and buying trends in the housing market.
Nationally, average interest rates for a 30-year, fixed rate, conforming mortgage climbed slightly during the first quarter of 2012 yet still remained at historically low levels. "On January 1, 2012, the average rate for this type of loan through our lender clients was 4.02 percent," Allen said. "Rates reached a low of 3.92 percent on February 2 and a high of 4.18 percent on March 20. On March 30, the last business day of the quarter, the average rate stood at 4.06 percent."
Housing prices in most major cities have continued to fall, according to the Case-Shiller Home Price Index, but analysts are expecting prices to rise modestly during 2012. On the positive side, the Case-Shiller data indicated price increases in Miami, Phoenix and Washington, D.C. This is a ray of hope for Florida and Arizona, which were especially hard hit by the housing market's difficulties.
The consumer-estimated, average home price for applications in the study was virtually unchanged, coming in at $267,204 in the first quarter of 2012 and $266,507 in the first quarter of 2011. The average loan amount fell slightly -- from $188,528 to $185,223 -- indicating a small increase in average down payment amounts.
"Things are improving, but, even though rates are at record lows, the total mortgage market in 2011 was less than a third of what it was in 2003 -- roughly $1.2 trillion versus $3.8 trillion," Allen said. "This shows just how much the housing and mortgage markets have been impacted by economic conditions."
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