With Mortgage Rates Down, Loan Applications Surge

While mortgage rates continue to drop, more potential home buyers are taking the plunge into becoming a homeowner. Many of these buyers are becoming a homeowner for the very first time! But it’s exciting to see the number of mortgage loan applications increase which could mean a very small yet significant sign that the economy could be in a bit of an upswing.

The mortgage rates have actually dropped for four consecutive weeks. This has led many to take advantage of the rates while they are still so low. According to statistics, the activity in the mortgage application industry jumped by more than 8 percent last week which shows the eagerness of Americans to realize their dream of owning their own home. Of course, many of these applications are for people already in their home who are applying for a loan to refinance. But those numbers are low because the number of loan requests for refinance is about half what it was at this time last year. Last week, little more than half of the loan applications were for those who wanted to refinance.

As far as mortgage rates go, the average rate for a 30-year fixed rate loan was about 4.63 percent this past week, according to Freddie Mac. That’s almost a tenth of a percent less than they were the week before when they averaged 4.71 percent. However, that’s a full three-tenths of a drop from the 4.93 percent where the mortgage rates stood last year at this time.

For 15-year fixed rate mortgages, you can expect to pay about a 3.89 percent interest rate if you are a qualified buyer. That’s a drop from the 4.30 percent from last year. You can also save money on adjustable rate mortgages. The rate for a five-year adjustable rate mortgage dropped from 3.47 during the previous week to 3.41 percent this past week. The figure for these mortgages last year was 3.95 percent. Some of the lowest rates come with a one-year adjustable rate mortgage. If you qualify and you prefer a short term mortgage like this, you can get rates as low as 3.11 percent which is a small drop from last week’s rates at 3.14 percent. But compared to last year, the 3.11 percent is nearly an entire percentage point lower than the 4.02 percent in 2010.

These numbers represent some of the lowest mortgage rates we have seen in 2011. There are signs that the economy is experiencing a comeback since nearly a quarter of a million jobs were added. However, unemployment rose to 9 percent which is the highest it has been since January.

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