Mortgage Applications Fall Again
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.
Rising interest rates continue to hamper mortgage applications as the mortgage applications index continued its two month decline. For the week ended June 12th, the composite applications index, which includes both purchase mortgages and refinancings, dropped 5.5%. The purchase applications index declined 4.0% while the refinance applications index decreased 7.0%. The steady climb in interest rates over the past two months is having a negative impact on mortgage activity. Interest rates continue to climb with the average interest rate for conforming loans (mortgage amount less than $417,000) increasing to 4.22% as compared to 4.17% for the prior week. (Source: Bloomberg)
What it Means for Mortgage Borrowers
A decline in mortgage application activity is not always a negative for mortgage borrowers. A drop in applications means that lenders should be more aggressive in competing for borrowers’ mortgage business which may make them more likely to negotiate mortgage terms and offer discounted fees. Although mortgage rates have increased over the past two months, they remain relatively low on a historical basis. Borrowers considering buying a home or refinancing in the next six-to-twelve months should use the INTEREST RATES feature on FREEandCLEAR to monitor interest rates and fees for lenders in their area and contact lenders to get pre-approved for their mortgage. Comparing mortgage offers from three-to-four lenders is the best way to save money when you get a mortgage and getting pre-approved ensures that you can move quickly to buy a home or refinance when interest rates hit your target level.
The FREEandCLEAR Mortgage Expert
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