Chicago Real Estate Blog

Home Loan Applications Are On the Rise

The first week of April reveals a positive sign for the U.S. housing market as mortgage requests increased over five percent from the previous week. According to the Mortgage Bankers Association (MBA), the home loan application volume has improved since the end of March, jumping a seasonally adjusted 5.4% (unadjusted was 5.7%).

The MBA tracks mortgage application activity with the Market Composite Index, which went up from 688.3 in the week ending March 28 to 725.6 in the week ending April 4 (nearly an 11% increase from the same week in 2007). The index is calculated on a 100 unit base and includes roughly half of mortgage apps. in the country.

Additionally, an agreement between major lenders and government-backed investors may help boost home loan demand for higher-end real estate. The new agreement, which would make funds for mortgage amounts between $417,000 and $729,750 more accessible, is headed up by government-sponsored lender Freddie Mac. Up until now, big financing institutions like Citigroup, J.P. Morgan Chase and Wells Fargo have been hesitant to offer the so-called "conforming jumbo" mortgages because nothing was set in stone on how much Freddie Mac or Fannie Mae would pay for the large home loans.

Now, Freddie Mac has said it will assume limited time commitments for how much it is going to pay the three lenders for conforming jumbo mortgages. With the added security, the lenders are anticipated to take on more large home loans, which will make mortgages on upmarket real estate more available to borrowers.

Posted at 01:42PM Apr 18, 2008 by Kate Hoffman in General  |  Comments[0]