REITs Gain as Mortgage Applications Rise in the US
The Dollar Is Up and the Euro Is Down on FOMC Minutes (Part 2 of 4)
Real estate stocks gain as mortgage market indicators are positive
The iShares US Real Estate fund (IYR), which invests in the real estate sector in the US, gained 0.28% as positive news from the mortgage market drove stocks of real estate investment trusts (or REITs) such as Iron Mountain (IRM), Macerich (MAC), and Host Hotels & Resorts (HST) up by 2.12%, 2%, and 0.95%, respectively.
Mortgage purchase applications increased by 7%
The Mortgage Bankers Association (or MBA) in the US came out with the April 8 release of its Weekly Applications Survey. The index is a leading indicator of housing and mortgage finance activity in the US. The index values are calculated with the week of March 16, 1990, as the base.
In the US (IVV), mortgage applications for purchases and refinances increased by 0.4% for the week ended April 3, compared to the previous week. Mortgage applications for purchases increased by 7%. Applications for refinances fell back by 3%.
Low interest rates boost demand for mortgages
The increased demand for mortgage loans was boosted by the lower interest rates. For example, the average rate for a 30-year fixed-rate mortgage was 3.86%, compared to 3.89% in the previous week. The rate for a 15-year fixed-rate mortgage was 3.15%, compared to 3.21% in the previous week.
“Purchase mortgage application volume last week increased to its highest level since July 2013, spurred on by still low mortgage rates and strengthening housing markets. Purchase volume has increased for three straight weeks now on a seasonally adjusted basis,” MBA’s chief economist, Mike Fratantoni, commented.
While housing activity in the US seemed to have picked up pace, manufacturing activity in the Eurozone’s strongest economy dropped for the second month.
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