Mortgage Applications Fall Despite Lower Home Loan Rates
U.S. mortgage applications dropped in the last week, reflecting weaker levels of home purchase loan demand even as average mortgage rates dipped slightly.
The Mortgage Bankers Association, according to Reuters, said that its seasonally adjusted index of mortgage application activity, which includes refinancing and home purchase loans, for the week ended February 2 dipped 0.2 percent to 630.1.
The four-week moving average of mortgage applications, which better tracks trends than the more-volatile weekly figures, was down 1.6 percent.
Borrowing costs on 30-year fixed-rate mortgages, excluding points, averaged 6.23 percent, down 0.06 percent from the previous week. It was 30-year mortgage rates‘ first drop since early January.
Last week’s mortgage rates were slightly below year-ago levels of 6.25 percent.
The MBA’s seasonally adjusted purchase index, widely considered a timely gauge of U.S. home sales, fell 0.8 percent to 404.7.
The index was also below its year-ago level of 425.1.
Americans looking to a mortgage refinance for their current home loans tend to be sensitive to shifts in interest rate moves, which may have been the result of last week’s modest rise in demand for this type of transaction.
REFINACING APPLICATIONS RISE
The group’s seasonally adjusted index of home mortgage refinancing applications increased 0.2 percent to 1,943.4. A year earlier the index stood at 1,751.0.
The share of applications dedicated strictly to mortgage refinancing rather than to home loans decreased to 46.1 percent from 47.4 percent the previous week.
Fixed 15-year mortgage rates, a popular choice for mortgage refinancing, averaged 5.96 percent, down from 6.01 percent. Rates on one-year adjustable-rate mortgages (ARMs) decreased to 5.84 percent from 5.86 percent.
The ARM share of activity increased to 22.3 percent from 21.4 percent the previous week.
U.S. housing industry indexes, in general, tend to be volatile, but a spate of recent data has shown improvement in the housing market. The MBA’s survey covers about 50 percent of all U.S. retail residential home loans.