Mortgage Applications Drop, Despite Low Rates

June 1, 2011

Mortgage applications dropped 4 percent last week compared to a week earlier, despite interest rates hitting new lows for the year.

The refinance index, which tends to make up the biggest bulk of mortgage applications, fell 5.7 percent for the week ending May 27. The purchase index remained mostly flat.

"Interest rates fell last week as incoming economic data was weaker than anticipated," says Mike Fratantoni, vice president of research and economics for the Mortgage Bankers Association. "Despite this drop in rates, the number of refinance applications fell. In fact, the last time mortgage rates were this low, refinance volume was more than twenty percent higher. It is likely that many borrowers still cannot qualify to refinance given the lack of equity in their homes."

Source: “Mortgage Applications Drop 4% on Weaker Economic Data,”HousingWire (June 1, 2011)