Purchase Applications Snap Losing Streak

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.

Although composite mortgage application activity continues to decline in February, for the week ending February 20th, the purchase mortgage application index snapped a six week losing streak, increasing 5.0% as compared to the prior week. The composite mortgage application index, which includes both home purchase mortgages and refinancings, continued its downward slide, declining 3.5% on the week as compared to a 13.2% decline for the prior week and a 9.0% decline for the week before that. Refinancing applications continue to drag down the composite index, dropping 8.0% on the week following a 16.2% drop in the prior week and a 10.0% drop in the week before that. Interest rates continued to edge up with the average interest rate for conforming loans (mortgage amount less than $417,000) increasing to 3.99% as compared to 3.93% for the prior week. The gradual increase in interest rates is putting a damper on refinance activity while purchase mortgage application activity is showing some signs of life after a month and a half lull. (Source: Bloomberg)

What it Means for Mortgage Borrowers
Overall mortgage application activity continues to decline during February but the positive performance for the purchase application index is a bright spot. Homeowners with existing mortgages should use our Refinance Calculator to determine if they can save money by refinancing despite the moderate increase in interest rates. Now continues to be a favorable time for home buyers as interest rates remain relatively attractive, despite their increase, and home prices remain stable as indicated by the existing and new home sales reports for February. Check out our Mortgage Selector Calculator to determine what size mortgage you can afford and the mortgage program that is right for you. As always, use the INTEREST RATES function on FREEandCLEAR to keep track of mortgage rates for lenders in your area.

The FREEandCLEAR Mortgage Expert
www.freeandclear.com