Mortgage Applications Spike Ahead of Tax Credit Deadline

The total volume of applications submitted for mortgages jumped 4% in the week ending April 30 after falling 2.9% the previous week, ahead of the April 30 deadline to sign contracts for the first-time homebuyer tax credit, according to a weekly survey by the Mortgage Bankers Association (MBA). A separate survey of mortgage applications by household also rose in the same week, although not to the same extent. MBA found that applications for purchase mortgages soared 13% from a week earlier, to the highest volume since October 2009. “Purchase application activity continued to increase in the last week of the homebuyer tax credit program,” said Michael Fratantoni, MBA vice president of research and economics. “Purchase applications were up 13% over the previous week and almost 24% over the last month, driven by significant increases in both conventional and government purchase applications.” The volume of applications for conventional purchase mortgages rose 9.4%, while the volume of applications for purchase mortgages ensured by the government — through FHA and VA — soared 16.7%. The hike in overall purchase apps more than made up for a 2.1% decline in the volume of applications for refinance. MBA also found applications for refinance now account for 51.9% of applications, down from 55.7% a week earlier. A separate survey of the number of households submitting mortgage applications — called the mortgage application index (MAX) ticked up 0.1% in the same week. “The federal tax credit goes out with a thud as the MAX fails to break from its torpid pace,” MAX publisher Mortgage Maxx wrote in weekly commentary. “The modest increase in the MAX the past few weeks appears mostly attributable to expected seasonal increase in home purchase activity. Refinancings remain flat as the best affordability in nominal mortgage rates passes and anyone who could, would, or should already has.” Write to Diana Golobay.

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