Loan Amounts and Down Payments Decrease While Rates Increase

Mortgage loan interest rates were impacted by several industry factors and continued to increase according to this week’s rate reports.
Despite a general upwards trend, over the past few weeks all three mortgage loan interest rates have changed minimally, usually increasing less than 10 basis points per week. Both fixed and adjustable interest rates decreased due to the government shutdown in September, but all three rates have slowly rebounded in the following weeks.
For the week ending Nov. 14, 2013, the 30-year fixed-rate mortgage averaged 4.16 percent, a seven basis point increase from 4.09 percent reported in the previous week.
The second rate change this week is the 15-year FRM which averaged 3.14 percent, a small upswing from last week’s 3.1 percent.
The 5/1 adjustable-rate mortgage, the final mortgage loan interest rate reported, increased only three basis points from 2.74 percent to 2.77 percent.
In comparison to several weeks in September that were mainly influenced by a singular event, the government shutdown, this week’s housing report was influenced by several factors.
One change in the housing economy is the downtrend of down payments. The average down payment in the United States decreased 2.74 percent from the last fiscal quarter, according to a new report from LendingTree. On a national scale, average down payments decreased from 16.1 percent in Q2 2013 to 15.74 percent in Q3 2013.
The three states with the lowest average down payment percentage on a 30-year mortgage loan are Nebraska (12.5 percent), South Dakota (12.8 percent) and Arkansas (12.9 percent). The three states with the highest average down payments are in generally high-cost areas of housing such as New York (18 percent), California (18.6 percent) and New Jersey (18.8 percent).
Average loan amounts also fell. Mortgage loan amounts decreased from $221,694 to $218,343 in the same time period.
The changes are an outcome of looser lending standards according to Doug Lebda, founder and CEO of LendingTree. He said that lenders are adjusting the minimum requirements as an incentive to attract more mortgage loan borrowers.
Lending risks have also decreased.
“When we see lenders accept lower down payments from qualified borrowers, it shows lender confidence in the market and in home values,” Lebda said.
The improved market has created a more positive lending environment, causing approval rates to grow. A J.D. Power report released today found that customer satisfaction with mortgage loan origination lenders has jumped to a seven-year high. 

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