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.
Mortgage application activity continues to cool off and experienced a meaningful decline in the first first week of February. For the week ending February 6th, the composite mortgage application index, which includes both home purchase mortgages and refinancings, decreased 9.0% as compared to a 1.3% increase for the week ended January 30th. Home purchase mortgage applications were down 7.0%, falling for the fourth straight week. Refinancing applications declined 10.0%, reversing course as compared to the 3.0% increase in the prior week. After a roaring start to 2015, the mortgage market has pulled back significantly with application activity comparable to 2014. Interest rates remain low but edged up on the week with the average interest rate for conforming loans (mortgage amount less than $417,000) increasing slightly to 3.84% as compared to 3.79% for the prior week. (Source: Bloomberg)
What it Means for Mortgage Borrowers
We continue to see a return to normalcy in the mortgage market. After a mad refinancing rush to kick off 2015, refinancing applications continue to stabilize and purchase applications continue their lackluster performance. The stabilizing of the mortgage market is good for borrowers as lenders will be more aggressive in pursuing prospective customers and potentially more willing to negotiate better terms for borrowers. Interest rates continue to be attractive and now is a great time for borrowers to consider refinancing their mortgage. If you are thinking about buying a home in the next six-to-twelve months now is a great time to establish relationships with multiple lenders to see what size mortgage you can afford and to compare interest rates and fees. Use the INTEREST RATES function on FREEandCLEAR to contact lenders in your area about refinancing or obtaining a home purchase mortgage.
The FREEandCLEAR Mortgage Expert