Home Purchase Mortgage Applications Flatten
At FREEandCLEAR, we follow the Mortgage Bankers’ Association (MBA) mortgage applications index which measures both purchase and refinance applications for mortgage lenders across the country. An increase in the MBA applications index reflects an increase in mortgage applications while a decrease in the index reflects a decline in mortgage applications. For the week ended November 7th, the composite mortgage application index, which includes both home purchase mortgages and refinancings, decreased slightly with home purchase mortgage applications inching up and refinancing applications continuing their recent downward slide.
For the week ended November 7th, the purchase application index increased 1.0% as compared to the prior week, which was up 3.0%. The decrease in the refinance application index accelerated as the index declined 11.0% as compared to the prior week, which was down 6.0%. The composite index, which includes both purchase and refinance mortgage applications, decreased 0.9% as compared to the prior week, which was down 2.6%. The drop-off in refinance applications dragged down the composite application index, which declined for the third consecutive week. Industry analysts were hoping to see continued momentum in the home purchase mortgage market and although the purchase application index increased, the deceleration relative to the prior week is somewhat disappointing. Interest rates remained relatively steady with the average interest rate for conforming loans increasing to 4.19%, as compared to 4.17% for the prior week. (Source: Bloomberg)
What it Means for Mortgage Borrowers
The lackluster performance of the purchase application index means that home sales will likely remain relatively flat over the next several weeks. Analysts had hoped that the decline in interest rates in October would trigger a meaningful increase in home purchase activity. Although last week’s mortgage application index report showed signs of life in the home purchase market, this week’s report suggests that uptick in activity was relatively temporary. This is not bad news for borrowers though. A decline in mortgage application activity means that lenders should be more aggressive in trying to generate new business. Borrowers can potentially take advantage of lender competition by negotiating better terms for their mortgages. Check out our step-by-step discussion on how to compare and select mortgages and use our newly updated INTEREST RATES feature to review interest rates and fees for lenders in your area.
The FREEandCLEAR Mortgage Expert
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