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Low Mortgage Rates Adding to Purchase Loans

By on September 2, 2014 in Mortgage Rates

Purchase home loans are increasingly high today, exceeding that of refinance loans. Mortgage rates are lower than they have been the past year and U.S. lenders are seeing more interest in purchasing rather than refinance, as much as two-thirds for the month of June.

Ellie Mae Confirms Home Sales Increase Based on Numbers of Loans Originated in June

Based in the total loans originated in June, Ellie Mae being a software firm for mortgage origination has reportedly handled well over 3,000,000 mortgage applications annually and this June with 65% of them being purchase mortgage closings.

However, purchase shares took a sudden decline a month prior in May this year, just when purchase shares was about to hit its 12 month streak, instead ending at 11. We have seen home values spike up to more than 20% in several cities like Las Vegas and San Francisco. This may have cause some sort of urgency for many Americans to take advantage of today’s steady home prices throughout the nation.

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Home buyers today are seeing that the housing market certainly does not get any lower and nor should they procrastinate, especially with several potential buyers and multiple offers in properties. Homebuyers are no longer too afraid to put out reasonable bids in these homes.

According to a weekly Freddie Mac mortgage rate survey in which included over 100 banks, presented 30 year mortgage rates holding in a quarter percent of 4.25% for the past 58 weeks. Apparently during this particular time, refinances has taken a decline close to 75% in a quarterly volume in the year, despite the many homeowners who are eligible, if not well qualified for a refinance. Based in Freddie Mac’s survey findings, the average household to refinance actually save well over 30% with current mortgage rates today.

These findings are comprised with refinances on rate reduction or switching of mortgage term along with cash-outs. A total number of 667,000 households were HARP refis, a government endorsed program that specifically targets underwater homeowners.

All-Time High for Purchase Loans and Refinances

One of today’s most attractive purchase mortgage loans is FHA, which offers many of its homebuyers a 5% downpayment and require lower credit scores when compared to the year prior. The average FICO score for today’s FHA borrowers is a reported 683, which is a whopping 12 points lower than a year ago. This is certainly expected, with lenders choosing to lower their credit score requirements for an FHA mortgage, some as low as 580.

FHA purchase loans takes the lead over refinances according to this most recent graph analysis provided by MBA and HUD:


With the FHA offering its Back to Work Program, this expands the likelihood of more eligible borrowers, being that the program automatically lowers the FICO score requirements and allowing for borrowers who have recently experienced a bankruptcy, short sale or foreclosure just 12 months prior.

Are you strongly considering to purchase with FHA? Click HERE to see if you are eligible for an FHA Purchase Loan

Also included in Ellie Mae’s June report, data analysis showed that more applications were getting approved for a mortgage when compared with the past few months. With an all time high of nearly 64% being purchase loans and 56% refinances.

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About the Author

About the Author: Jessica Lucas is the managing editor for Mortgage Home Base, a top real estate finance blog dedicated to helping borrowers and home buyers understand the home loan process. Follow Jessica on Google +, and share your comments here. .
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