May 27, 2018

Low Mortgage Rates May Be Losing Pull

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Low Mortgage Rates May Be Losing Pull

Despite recent decreases that have sent rates near record lows, total mortgage applications for refinancings and home purchases are falling. In the latest week ending Feb. 26, overall applications fell 4.8 percent on a week-to-week seasonally adjusted basis, the Mortgage Bankers Association reported Wednesday. Applications for loan refinance plummeted 7 percent last week compared to the prior week, reaching the lowest level since the start of 2016.

"Despite a slight drop in rates, refinance applications decreased overall. Applications for both conventional and government refinance loans decreased, as the supply of borrowers who could benefit from rates at this level begins to diminish," Joel Kan, MBA's associate vice president for forecasting and industry surveys, told CNBC.

Applications to purchase a home dropped 1 percent last week. However, applications for home purchases remain 27 percent higher than the same week a year ago. CNBC reports that indicates a “stronger start to the spring 2016 housing market.”

The average 30-year fixed-rate mortgage fell to 3.83 percent last week from 3.85 percent the prior week, MBA reports.

Source: “Mortgage Applications Fall 4.8%, Despite Rate Drop,” CNBC (March 2, 2016)