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Commercial and Residential Property Markets Strong in the US

A new Mortgage Bankers Association survey predicts that mortgage lending for commercial and multifamily properties will increase in the U.S. in 2015.

Lenders maintain a strong willingness to place new loans and borrowers remain eager to take them up on it. 100 percent of the top firms anticipate that originations will go up in 2015, and 68 percent predict an increase of 5 percent or more. 72 percent said that originations with their own firms will go up by 5 percent or more.

Jamie Woodwell, Vice President for the MBA’s Commercial Real Estate Research, confirmed that commercial mortgage lenders predict another competitive year, with 10-year loans made during 2005-2007 maturing and fueling demand from borrowers.

The Market Composite Index, which measures the volume of mortgage loan applications, increased 14.2% on a seasonally adjusted basis from the previous week.On an unadjusted basis, the difference was 17 percent. The Refinance Index was also up 22 percent from the week before.

Mike Fratantoni, Chief Economist at MBA, said that mortgage application volume is at its highest since June 2013, primarily due to mortgage rates being at their lowest level since May 2013. Another factor is the recent reduction in FHA mortgage insurance premiums, as FHA refinance applications went up by 57 percent in mid-January. Refinances accounted for 48 percent of overall FHA activity, compared to 77 percent for conventional loans and 73 percent for VA.

Mr. Fratantoni added that compared to the previous week, conventional purchase applications were lower by around 3 percent on a seasonally adjusted basis, but up 5 percent compared to the year before.

Conventional refinance applications were up 21 percent compared to the previous week, while government refinances were 29 percent higher in volume. The latter surge was driven by a 57 percent rise in FHA loan applications, which elevated the FHA portion of refinance applications to 5.2 from 4.1 percent the week before.

The refinance portion of mortgage volume went up to 74 percent of all applications, an increase of 3 percent over the week prior. Adjustable-rate mortgage (ARM) activity increased to 6.4 percent of all applications.

Structural Defects Insurance

The FHA portion of all applications was at 8 percent, up from 7.5 percent the previous week. The VA share went down to 9.4 percent from 9.7 the week before, and the USDA share was at 0.6 percent, down from 0.8 percent.

The typical interest rate for 30-year fixed-rate mortgage contracts with balances of $417,000 or less went down to 3.8 percent, its lowest total since May 2013. Points increased from 0.23 to 0.29 for 80 percent LTV ratio loans. For 30-year fixed-rate mortgage contracts with loan balances greater than $417,000, the average contract interest rate went down from 3.88 percent to 3.86, another all-time low since May 2013. At 0.23, points remained unchanged for 80 percent LTV loans.

Average interest rates for 30-year fixed-rate mortgage contracts with FHA backing decreased to 3.66 percent, the lowest value since May 2013. Points increased from -0.05 to 0.15 for 80 percent LTV loans.

The average interest rate for 15-year fixed-rate mortgages lowered to 3.10 percent from 3.16, another record low from May 2013. Points decreased to 0.29 from 0.30 for 80 percent LTV loans.

The average contract interest rate for 5/1 ARMs went down 2.87 percent, its biggest low since June 2013, with points decreasing to 0.41 from 0.46 for 80 percent LTV loans.

Specialists in Construction Insurance

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