Lower Interest Rates Boost Refinance Applications
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. Driven by a significant increase in refinance application activity due to lower interest rates, the mortgage application index for the week ended October 10th, 2014 increased for the second consecutive week.
For the week ended October 10th, the refinance application index increased 11.0% as compared to the prior week. The purchase application index decreased 1.0% as compared to the prior week. The composite index, which includes both purchase and refinance mortgage applications, increased 5.6% as compared to the prior week. The increase in the index is attributed to the recent decline in interest rates, which drives refinancing applications, although purchase applications remained relatively lackluster. The average interest rate for conforming loans declined to 4.20%, its lowest level since June 2013. (Source: Bloomberg)
What it Means for Mortgage Borrowers
The decline in interest rates is having an immediate impact on existing borrowers who are prudently refinancing to lock in a lower interest rate and monthly mortgage payment. FREEandCLEAR believes that continued lower interest rates will eventually pull more home buyers into the market especially if housing prices continue to stabilize. If first-time home buyers become more active in the marketplace this could have a significant impact on the real estate and mortgage markets. If you are thinking about buying a home for the first time, check out the FREEandCLEAR First-Time Home Buyer Mortgage Cheat Sheet. Existing homeowners can review our Refinance Process Guide to walk them through the process step-by-step. Additionally, use the COMPARE LENDERS feature on FREEandCLEAR to check interest rates in your area.
The FREEandCLEAR Mortgage Expert
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