Mortgage Activity Pickup on Lower Rates and Better Weather

Real Estate

The Mortgage Bankers Association today reported on mortgage activity for the week ending March 18, 2011. The period marked improvement over the week just prior to it, and we believe we know why.

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Mortgage Activity Pickup on Lower Rates and Better Weather

The Mortgage Bankers Association (MBA) reported on mortgage activity for the March 18 period. While mortgage rates did not change much from the prior week, the recent decline from higher February and early March periods certainly drove business. Last week we noted a pickup in refinance activity, and suggested that mortgage activity tied to home purchases are less nimble but should also pick up. We think that is exactly what happened this week, and we expect activity also benefited from a warm weather spurt that started spring cleaning, and home shopping during the period.

The average contracted rate on 30-year and 15-year fixed rate mortgages inched higher to 4.8% (from 4.79%) and 4.02% (from 4.03%), respectively last week. However, the approximate 20 basis point drop from recent levels continued to drive refinancing activity. This past week, we believe, aided by warm weather as well, purchase activity picked up too.

The Market Composite Index of overall mortgage activity rose 2.7% on a seasonally adjusted basis (2.8% unadjusted). The modest gain was driven by a 2.7% increase in the Refinance Index, as refinancing activity stuck at 66.4% of total activity. The Purchase Index also gained this week, rising 2.7% on a seasonally adjusted basis.

While Existing and New Home Sales data reported this week for the month of February offered distressing news, this mortgage data covering a more recent period offers a more relevant and hopeful message. As long as the global investment community remains concerned about events in the Middle East and Asia, demand for safe-haven and concerns about global economic growth should help keep interest rates tamed. As the spring selling season begins now that spring itself is officially upon us, soon followed by regularly warmer days, we believe today's data shows housing growth also lies in store.



Editor's Note: Article should interest investors in Bank of America (NYSE: BAC), Freddie Mac (OTC: FMCC.OB), Fannie Mae (OTC: FNMA.OB), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), Toronto Dominion (NYSE: TD), BB&T (NYSE: BBT), CIT (NYSE: CIT), Bank United (NYSE: BKU), First Citizens (OTC: FCNCA.PK), Synovus (NYSE: SNV), United Bankshares (Nasdaq: UBSI), Hampton Roads Bankshares (Nasdaq: HMPR), WesBanco (Nasdaq: WSBC), City Holding (Nasdaq: CHCO), Sandy Spring (Nasdaq: SASR), First Citizens (OTC: FCBN.OB), SCBT Financial (Nasdaq: SCBT), Wilmington Trust (NYSE: WL), WSFS Financial (Nasdaq: WSFS), Southside Bancshares (Nasdaq: SBSI), Stellar One (Nasdaq: STEL), Union First Market (Nasdaq: UBSH), Eagle Bancorp (Nasdaq: EGBN), First Bancorp (Nasdaq: FBNC), Ameris (Nasdaq: ABCB), The Bancorp (Nasdaq: TBBK), First Community (Nasdaq: FCBC), Capital City (Nasdaq: CCBG), Financial Institutions (Nasdaq: FISI), National Bankshares (Nasdaq: NKSH), Citizens & Northern (Nasdaq: CZNC), Charter Financial (Nasdaq: CHFN), Seacoast Banking (Nasdaq: SBCF), TIB Financial (Nasdaq: TIBB), American National (Nasdaq: AMNB), United Community (Nasdaq: UCBI), Middleburg Financial (Nasdaq: MBRG), Heritage Financial (Nasdaq: HBOS), Zions Bancorp (Nasdaq: ZION), East West Bancorp (Nasdaq: EWBC), City National (NYSE: CYN), Bank of Hawaii (NYSE: BOH), SVB Financial (Nasdaq: SIVB), Westamerica (Nasdaq: WABC), Cathay General (Nasdaq: CATY), Umpqua (Nasdaq: UMPQ), Glacier Bancorp (Nasdaq: GBCI), Pacific Capital (Nasdaq: PCBC), PacWest (Nasdaq: PACW), Western Alliance (NYSE: WAL), First National Alaska (OTC: FBAK.OB), First Interstate Bancsystem (Nasdaq: FIBK), Nara (Nasdaq: NARA), West Coast (Nasdaq: WCBO), TriCo (Nasdaq: TCBK), Territorial (Nasdaq: TBNK), Washington Banking (Nasdaq: WCBO), Bank of Marin (Nasdaq: BMRC), Hanmi (Nasdaq: HAFC), PNC Bank (NYSE: PNC), J.P. Morgan Chase (NYSE: JPM), United Bankshares (Nasdaq: UBSI), Bank of New York Mellon (NYSE: BK), MB Financial (Nasdaq: MBFI), Astoria Financial (NYSE: AF), New York Community (NYSE: NYB), Hudson City (Nasdaq: HCBK), People’s United (Nasdaq: PBCT), First Niagra (Nasdaq: FNFG), Capitol Federal (Nasdaq: CFFN), Washington Federal (Nasdaq: WFSL), Investor’s Bancorp (Nasdaq: ISBC), Northwest Bankshares (Nasdaq: NWBI), Sterling Financial (Nasdaq: STSA), Ocwen (NYSE: OCN), Flagstar (NYSE: FBC), Provident (NYSE: PFS), Colombia Banking (Nasdaq: COLB), Kearny (Nasdaq: KRNY), Brookline (Nasdaq: BRKL), Dime Community (Nasdaq: DCOM), Flushing Financial (Nasdaq: FFIC), Danvers (Nasdaq: DNBK).

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