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.
The composite mortgage application index, which includes both home purchase mortgages and refinancings, barely broke a multi-week downward streak, increasing a modest 0.1% for the week ending February 27th. The composite index was boosted by a slight uptick in refinancing applications, which increased 1.0% for the week as compared to an 8.0% decline for the prior week. The purchase application index basically held steady, declining a minuscule 0.2% as compared to a 5.0% increase for the prior week. Interest rates reversed their gradual upward climb with the average interest rate for conforming loans (mortgage amount less than $417,000) decreasing to 3.96% as compared to 3.99% for the prior week. The latest mortgage application index report underscores the lackluster nature of the mortgage and real estate markers. (Source: Bloomberg)
What it Means for Mortgage Borrowers
After mortgage application activity declined over most of February, a flat report to end the month is relatively positive news. The small decline in interest rates is also a positive development for potential mortgage borrowers after several weeks of small increases in mortgage rates. The lack of both purchase and refinancing mortgage application activity means that lenders are aggressively pursuing new mortgage customers. Use this dynamic to your advantage if you are thinking about buying a home or refinancing. Lenders should be more willing to compete for your business which means they may be more open to negotiating lower interest rates or fees. If you are thinking about getting a mortgage FREEandCLEAR recommends that you gather proposals from at least four lenders to find the mortgage that is right for you. Whether you are getting a mortgage to buy a home or refinancing, we provide a comprehensive discussion on How to Compare Mortgage Proposals and Select a Lender and use our INTEREST RATES function to review interest rates and fees for lenders in your area. Mortgage borrowers can take advantage of the lull in application activity to find the mortgage with the lowest interest rate and costs.
The FREEandCLEAR Mortgage Expert