Mortgage applications up at the first of June
In April 2008, the federal government started handing out tax credits to first-time home buyers. That program expanded to include repeat buyers. By the time it ended at the end of April last year, qualified first-time buyers could receive up to $8,000 and repeat buyers could get up to $6,500.
Buyers were initially instructed to get homes under contract before May 1 and close on them prior to July 1. That resulted in a flurry of mortgage applications through the end of April and a decline in them through June as people got ready to close on there purchases.
That being the case, we’re no longer comparing against times when tax credits were in place and can start to get a sense as to where the market is heading. According to the national Mortgage Bankers Association, purchase applications were up in June when compared against the same time last year and that is encouraging.
The Mortgage Bankers Association pointed out that interest rates on 30-year fixed mortgages stood at 4.51 percent, making them the lowest on record since November. Buyers took advantage of those low rates and purchase mortgage applications during the week of June 10 were up 6.1 percent compared to the same time last year.
There are a couple of things to keep in mind when considering the report. For one thing, mortgage rates are still hovering around that 4.51 low for a 30-year, fixed interest loan. Also, 15-year mortgage rates averaged 3.67 percent during the week of June 10 and are still around that level.
In other words, it’s comparatively cheap to borrow money right now and that works to the advantage of buyers. In Arkansas, low prices have attracted buyers and should continue to do so as real estate markets continue to recover.
Looking just at central Arkansas, we see the average sales price of a home in May fell about $1,200 from the same month last year to $161,467. Other areas of the state have reported drops in prices as well.
Interestingly enough, the average sales-to-list ratio throughout Arkansas remains around 96 to 97 percent in most areas – sellers who want, say, $100,000 for their homes can typically expect around $96,000 to $97,000 on average.
Real estate markets do tend to favor buyers these days. Those sellers who price their homes well will generally get some people looking at them and buyers can take advantage of solid prices and low interest rates.
Anyone who’s been paying attention knew the housing market recovery would take some time. While we’re certainly not out of the woods yet, it is at least encouraging to see interest rates remaining low and favorable prices for buyers. Getting potential buyers interested in purchasing homes is just the thing that fuels a recovery, so a growing number of purchase applications is a good sign.
Benton resident. Rogue journalist. Recovering attorney. Email = Ethan@FirstArkansasNews.net.