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.
Interest rates are wreaking havoc on the mortgage market as the applications index continues to seesaw with fluctuations in mortgage rates. After a moderate uptick last week, the mortgage applications index dropped significantly for the week ended June 26th. The composite applications index, which includes both purchase mortgages and refinancings, declined 4.7% after increasing 1.6% for the prior week. Purchase applications dropped 4.0% following a 1.0% increase for the prior week and a 4.0% decline two weeks ago. Refinance applications decreased 5.0% following a 2.0% increase for the prior week and a 7.0% decrease two weeks ago. After dipping slightly last week, mortgage rates bounced back with the average interest rate for conforming loans (mortgage amount less than $417,000) jumping to 4.26% as compared to 4.19% for the prior week. (Source: Bloomberg)
What it Means for Mortgage Borrowers
Despite very positive signs for the real estate and mortgage markets from the June new, existing and pending home sales reports, mortgage application activity continues to be dependent on interest rates. Although application activity is up on a year-over-year basis the increase in interest rates over the past several months has slowed down mortgage applications recently. Prospective home buyers or borrowers seeking to refinance should use this time to get prepared for the mortgage process. Check out our home purchase mortgage and mortgage refinance checklists to organize the personal and financial information you need when you apply for your mortgage. Additionally, monitor changes in mortgage rates using our INTEREST RATES feature so that you are ready to move quickly when mortgage rates hit your target zone. Although interest rates have increased, the continue to be attractive on a historical basis and now may be the right time for you to purchase a home or refinance.
The FREEandCLEAR Mortgage Expert