US Mortgage Applications Fall Despite Lower Rates

After rising the previous week, interest rates fell back again last week, but consumers were not enthused.

Overall mortgage application volume fell 1.9% for the week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was still 34% higher than a year earlier, thanks to a stronger refinance market this year.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.08% from 4.12%, with points decreasing to 0.33 from 0.38 (including the origination fee) for loans with a 20% down payment.

Last year, the average mortgage rate was 69 basis points higher. That’s why overall refinance demand is stronger now.

Refinance application volume did fall 2% last week, despite the rate drop, but was 81% higher than the same week one year ago.

“Mortgage rates right now are comparable to the average rate of 4.10% for June, but refinances last week were 7% lower than last month,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “This is an indication that as we see rates lower for longer, borrowers need more of a drop in rates to consider refinancing.”

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza