While real estate agents had lots of time for Christmas shopping this year, mortgage brokers probably gave lots of gift cards as mortgage activity reached a 5 year high.
With the historically low rates and consumers watching every penny, refinancing was the word on the street.
Now we can hope that some of this activity translates to home sales as the great prognosticators in Washington have predicted.
The Mortgage Bankers Association said Wednesday its weekly application index was essentially unchanged for the week ending Dec. 26. The index came in at 1245.7 from 1245.4 a week earlier. Applications surged earlier this month to the highest level since July 2003, when refinancing activity boomed at the peak of the housing market.
Story continues below ?advertisement | your ad hereMore than 80 percent of applications came from borrowers looking to refinance at more affordable rates, the trade group said. Refinance volume dipped by 0.4 percent, while purchase volume rose 1.4 percent. via msnbc.com.
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This is the start of where the market can begin to level out.
Home owners will start to be able to afford their homes much easier. Then the number of foreclosures on the market will slowly start to diddle down as new buyers come along and buy up what's currently for sale.
I think the overall interest in refinancing was definately high recently. However the problem is that although the rates dropped, many borrowers could not refinance because their home values dropped. Their new loan to value ratios were pushed up over 80% and their refinance would require PMI, thus wiping out much of the reduction in monthly interest.
With mortgage rates poised to drop to 4.5 percent all we need now is some tax incentives to help home sales.