April 19, 2018

Loan Demand Falls Even as Rates Inch Lower

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Loan Demand Falls Even as Rates Inch Lower

Mortgage applications fell slightly last week as an increase in refinancing applications was offset by a large decrease in applications for home purchases, the Mortgage Bankers Association reports Wednesday. 

Despite a drop in mortgage rates for the week, the MBA’s seasonally adjusted index showed mortgage application activity -- which includes refinancing and home purchase demand -- dropped 0.4 percent for the week ending Sept. 27. The drop follows a 5.5 percent gain the previous week in loan demand. 

Broken out, the refinancing index increased 3.1 percent last week. In recent weeks, the refinance index had hit its lowest level since June 2009 as more home owners put off refinancing while mortgage rates were rising. 

However, applications for home purchases -- viewed as a leading indicator of future home sales -- dropped 6 percent last week compared to one week earlier. 

Meanwhile, the Federal Reserve's recent decision to delay tapering its $85 billion per month bond purchases program has continued to help push down mortgage rates. The 30-year fixed-rate mortgage fell 13 basis points last week, averaging 4.49 percent, the MBA reports. Earlier in September, 30-year rates had averaged 4.8 percent, setting a high for 2013. 

Source: “U.S. mortgage applications dip slightly though rates fall: MBA,” Reuters (Oct. 2, 2013)

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