Mortgage Market Update – 05-21-14

Despite the spring buying season being in full bloom and mortgage rates at lows not seen in almost a year, mortgage application volume barely budged last week. The Mortgage Bankers Association reported that its Market Composite Index, a measure of total loan application volume, rose by 0.9% in the latest week, while the refinance index increased 4%. The purchase index fell by 3%.

Zillow reported today that the national negative equity rate fell to 18.8% in the first quarter of 2014, meaning more is owed on the home than it is currently worth. In Q4 of 2013, negative equity stood at 19.4%. Zillow said that negative equity tends to limit inventory, which pushes home values higher, which in turn makes those homes that are available, that much less affordable.

Government controlled mortgage finance giant Fannie Mae said today that it has cut its outlook for home sales in 2014, as well as 2015. The move comes after markets for new and existing homes experienced weakness in the first quarter. Fannie is now forecasting that existing home sales will hit 4.98 million this year, down from the 5.04 million originally projected. Single family homes are forecasted to see sales of 476,000 this year, down from 494,000.