Low interest rates continue to sustain momentum in the mortgage lending market.
The Mortgage Bankers Association’s most recent weekly mortgage loan application
index surged 25.6% to levels not seen since July 2003. The high activity has
led Freddie Mac to suggest that housing activity in 2004 could surpass the record
levels achieved in 2003.
While driving mortgage lending activity, low interest rates are also leading
to an ongoing rise in housing prices as consumers can be more aggressive since
they are able to lock in low monthly payments on higher priced properties that
might have been out of their reach previously. Freddie Mac reports that price
appreciation on houses rose at an amazing 17.8% annualized rate in the fourth
quarter of 2003. While this rate of appreciation is unusual, prices have risen
at least 7.6% in each of the past three years. The trend is expected to continue
in 2004 with a projected rise of 7.8%.