June 14th, 2012 3:53 PM by Richard T. Cirelli
Mortgage Applications Soar
The Mortgage Bankers Association of America reported that refinancing applications shot up 19% and the purchase index increased about 13% from a week earlier. These are the highest levels since spring 2009. On the local front, it is my observation that the purchase activity easily exceeds the national level.
The spike is attributed to:
· The perception that home values have bottomed out and are now rising.
· Increased refinancing volume as borrowers locked in at rates well below 4%.
· HARP volume has been rising and now represents about 28% of refinance applications," This is the Government's Home Affordable Refinance Program which allows underwater homeowners to refinance if their loan is owned by Fannie Mae or Freddie Mac and it was bought by those Agencies prior to June 1, 2009.
Increased Volume = Slower Service
The surge in refinance and purchase applications also means that lenders and all vendors are taking longer to process loans. I am seeing appraisals taking 2-3 weeks and underwriting taking at least a week even when submitted to the most efficient lenders. Some lenders are taking as long as 30-days to underwrite a file. I promise not to submit your loans to the slowest lenders but all Realtors, Buyers, Sellers, and those refinancing need to realize that the process takes longer as the volume increases.
How To Ensure Faster Service:
The best way to ensure a faster close on a purchase transaction is for the Buyer to be pre-approved with their lender in advance of finding a property. This means that we should have their income and asset documentation in advance so we eliminate potential obstacles to approval before opening escrow.
According to Fannie Mae’s May 2012 National Housing Survey:
· Americans expect home prices to increase by 1.4 percent over the next 12 months, up 0.5 percentage points since March 2012 and the highest value yet recorded
· Thirty-four percent say that home prices will go up in the next 12 months, the highest level recorded since March 2011.
· Forty-one percent expect home mortgage rates to go up in the next twelve months, a slight increase from last month.
· The percentage of respondents who say it is a good time to buy increased by 1 percentage point to 72 percent, while the percentage of respondents who say it is a good time to sell remained at 15 percent.
· Forty-nine percent of respondents think that home rental prices will go up, consistent with last month’s value and remaining the highest number recorded to date. .
Sounds like it’s a good time to buy!