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 two weeks ended January 2nd, the composite mortgage application index, which includes both home purchase mortgages and refinancings, slumped 9.1%, reflecting the seasonal holiday slowdown. The decline in the composite application index was driven by a 5.0% decrease in purchase applications, as compared to the prior two weeks. The refinance component of the index was down 12.0% as compared to the prior two weeks. Although the decline in application activity was attention-grabbing the drop-off was not unexpected as both home purchase mortgage and mortgage refinance application activity slows down significantly between Christmas and New Years. Perhaps more notable is that interest rates continued to creep downward to start 2015. The average interest rate for a 30 year fixed rate conforming mortgage decreased to 4.01% as compared to 4.06% for the prior MBA mortgage application index report. (Source: Econoday)
What it Means for Mortgage Borrowers
The dip in mortgage application activity was significant but not unexpected and FREEandCLEAR expects mortgage applications to rebound over the course of January as home buyers enter the market and existing home owners seek to refinance their mortgages at some of the lowest interest rates we have seen over the past two years. If you are thinking about buying a home, use the FREEandCLEAR Mortgage Selector calculator to determine what size mortgage you qualify for and what mortgage program best meets your financial and risk profile. If you are thinking about refinancing your mortgage use our Mortgage Refinance Calculator to determine how much money you can save. And as always, use the INTEREST RATES feature on FREEandCLEAR to keep tabs on mortgage rates for lenders in your area.
The FREEandCLEAR Mortgage Expert