Mortgage activity is bouncing back in the aftermath of Hurricane Sandy. Last week mortgage applications to buy homes rose +11% to an index level of 190. This compares with a decline of 5% in the previous week, reflecting the dislocation caused by Hurricane Sandy. Taken together, however, the two-week change was +5.45%, a fairly strong showing.
Refinance applications rose 13% following a decline of 5% in the previous week, snapping a 5-week streak of declines in the refi market. Housing continues to build momentum and prices are rising adequately as sentiment shifts; people prefer to own a home over renting. Thanks to the Federal Reserve, interest rates will remain low for a long period of time, helping to encourage lending.
Of course, the fiscal cliff looms on the horizon and should the automatic tax hikes go into effect along with spending reductions, that will hurt the market and slow the progress we’ve made since the 2008 crisis.