Loans Soar Ahead of New Mortgage Rules
Borrowers rushed to secure financing
last week, sending mortgage applications climbing 25.5 percent
week-over-week before the "Know Before You Owe" disclosure rules took
effect last Saturday.
"The number of applications for purchase and refinance mortgages soared last week due both to renewed rate volatility and many applications being filed prior to the TILA-RESPA regulatory change," says Lynn Fisher, MBA's vice president of research and economics.
Starting last Saturday, the TILA-RESPA Integrated Disclosure rule went into effect, which merged the HUD-1 Settlement Statement, the Good Faith Estimate, and the Truth-in-Lending disclosure form into two new closing forms: a Loan Estimate and a Closing Disclosure. The new rule aims to provide consumers with more time to review the total costs of their mortgage prior to closing. The Loan Estimate form is due to consumers three days after they apply for a loan, while the Closing Disclosure form is due three days prior to closing. Lenders have predicted some possible delays to closing as they transition to the new forms.
While the latest week shows a significant jump in the volume of mortgage applications, they remain low overall by historical standards. Purchase-application volume is still less than half of what it was during the housing boom of 2005 to 2007 and is at comparable levels to the late 1990s, MBA reports.
MBA also reported that the average 30-year fixed-rate mortgage fell to 3.99 percent last week, the lowest average since May.
Source: “Mortgage Applications Surge 25% on Regulation Worry,” CNBC (Oct. 7, 2015)
The New Mortgage RulesThe Mortgage Bankers Association reported that for the week ending Oct. 2, refinance applications spiked 24 percent on a seasonally adjusted basis while applications for home purchases rose 27 percent. Purchase applications, which are viewed as a leading gauge of home buying activity, are now 49 percent higher than a year ago and are at the highest level in five years.
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"The number of applications for purchase and refinance mortgages soared last week due both to renewed rate volatility and many applications being filed prior to the TILA-RESPA regulatory change," says Lynn Fisher, MBA's vice president of research and economics.
Starting last Saturday, the TILA-RESPA Integrated Disclosure rule went into effect, which merged the HUD-1 Settlement Statement, the Good Faith Estimate, and the Truth-in-Lending disclosure form into two new closing forms: a Loan Estimate and a Closing Disclosure. The new rule aims to provide consumers with more time to review the total costs of their mortgage prior to closing. The Loan Estimate form is due to consumers three days after they apply for a loan, while the Closing Disclosure form is due three days prior to closing. Lenders have predicted some possible delays to closing as they transition to the new forms.
While the latest week shows a significant jump in the volume of mortgage applications, they remain low overall by historical standards. Purchase-application volume is still less than half of what it was during the housing boom of 2005 to 2007 and is at comparable levels to the late 1990s, MBA reports.
MBA also reported that the average 30-year fixed-rate mortgage fell to 3.99 percent last week, the lowest average since May.
Source: “Mortgage Applications Surge 25% on Regulation Worry,” CNBC (Oct. 7, 2015)
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