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July 29, 2014

Despite Drop in Mortgage Rates, Loan Demand Stays Flat

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Despite Drop in Mortgage Rates, Loan Demand Stays Flat

Home mortgage applications held mostly flat in the latest week, despite a drop in mortgage rates, the Mortgage Bankers Association reported Wednesday.

The MBA’s mortgage application index – which reflects both home purchase demand and refinancings – rose slightly by 0.4 percent in the week ending Jan. 31. Broken out, refinancing applications rose 2.9 percent during the week, while applications for home purchases dropped 3.8 percent.

Mortgage applications for home purchases – viewed as a leading indicator of future home sales – is now down 17 percent from year ago levels.

Applications for refinancings have fallen nearly 63 percent from year ago levels. The 30-year fixed-rate mortgage averaged around 3.5 percent year ago, more than a full percentage less than today’s average.

The MBA reports that the average interest on a 30-year fixed-rate mortgage for the week ending Jan. 31 averaged 4.47 percent, dropping five basis points from the prior week.

Source: “Mortgage Applications Stuck Despite Sliding Rates,” CNBC (Feb. 5, 2014) and  “U.S. Mortgage Applications Rise in Latest Week,” Reuters (Feb. 5, 2014)

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