Wed, 05 Mar 2008 16:45:00
Mortgage activity springs to life, ARM rates dip
Mortgage News from Quicken Loans
The Mortgage Bankers Association announced today that mortgage activity jumped last week. For the week ending February 29, the number of Americans applying for a mortgage to purchase a home or refinance their current mortgage grew by 3% as compared to the previous week. Refinance activity was stronger, climbing 4.5% in the past week, while purchase activity increased 1.4%.
The report also showed that adjustable-rate mortgages (ARMs) are continuing to gain in popularity, rising 2.3 percent. This gain follows an increase of more than 3% last week.
Bob Walters, Chief Economist for Quicken Loans, says he is not surprised with the growing popularity of ARMs.
"Last week's gains in mortgage activity were likely spurred by favorable mortgage rates and a housing market that continues to see price reductions in the face of a huge inventory of unsold homes. While long-term rates saw some increases in February, short term rates have been falling. This has led to a boost in popularity for ARMs, as today's report shows, especially among consumers that plan to be in their home seven years or less," Walters said.
The most popular type of adjustable rate mortgage programs among consumers are hybrid ARMs in which the interest rate is fixed for a period of three, five or seven years (depending on the program) prior to beginning the adjustable period.
This article is reprinted by permission from Quicken Loans © 2008 Quicken Loans Inc. All rights reserved.