Mortgage rates continue to drop
The latest data shows that the average rate for a 30 year fixed rate mortgage declined 2 basis points since the last week to 4.81 percent.
The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages, 1 year ARMs as well as application volume for both purchase and refinance applications.
The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.
The latest data is showing that the average rate for a 30 year fixed rate mortgage declined 2 basis points since the last week to 4.81% while the purchase application volume declined 5.7% and the refinance application volume declined 12.2% over the same period.
It's important to note that with the final expiration of the governments massive housing tax credit subsidy, home purchase activity is dropping precipitously even with plunging interest rates.
The purchase application volume is now at the lowest level seen in well over a decade.
The following chart shows how the principle and interest cost and estimated annual income required to cover the PITI (using the 29% “rule of thumb”) on a $400,000 loan has changed since November 2006.
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