August 22, 2017

As Refinances Slow, Loan Demand Slips

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As Refinances Slow, Loan Demand Slips

Mortgage rates inched up last week, which pushed down refinancing activity. Total mortgage application volume, which includes applications for refinancings and home purchase, dropped 3.3 percent on a seasonally adjusted basis week-to-week, the Mortgage Bankers Association reports.

Nevertheless, mortgage activity is still up by nearly 21 percent compared to the same week one year ago. MBA mostly attributed the latest weekly drop to a 6 percent plunge in refinance applications. Refinancing activity is now at its lowest level since August.

The average on a 30-year fixed-rate mortgage was 3.94 percent last week, up from 3.89 percent the week prior, MBA reports.

"Financial market volatility subsided last week, allowing rates to increase to levels last seen in January," says Lynn Fisher, MBA's vice president of research and economics. "Even though mortgage rates have remained below 4 percent, the appetite to refinance has consistently declined over the last month. Relatively low rates should continue to assist the purchase market."

Applications for home purchases held mostly flat last week, budging just 0.3 percent for the week. Purchase applications are 33 percent higher than the same week a year ago and are at the highest level since January.

Source: “Mortgage Applications Drop 3.3% on Fewer Refinances,” CNBC (March 16, 2016)