Short-Lived Surge? Loan Demand Drops Again
September 24, 2014
Following last week’s nearly 8 percent spike in mortgage application activity, mortgage application volume reversed course and was back on its falling trend, as interest rates increased to the highest levels in several months, the Mortgage Bankers Association reports.
The MBA’s seasonally adjusted index of mortgage application activity showed applications down 4.1 percent in the week ending Sept. 19 compared with the previous week.
Applications for home purchases remain mostly stagnant on a seasonally adjusted basis, says Michael Fratantoni, the MBA’s chief economist. Applications for home purchases, viewed as a leading indicator of future home sales, fell 0.3 percent during the week and are down 16 percent from a year ago, a widening gap than in recent weeks.
"Purchase mortgage applications have trended down over the past three months, despite the declining interest rate environment," Doug Duncan, Fannie Mae's chief economist, noted in his monthly economic outlook. "This suggests a residual conservatism on the part of consumers and supports our view that the pace of growth in the housing sector will be subdued during the remainder of 2014, with modest improvement in 2015."
Meanwhile, applications for refinancings dropped 7 percent during the week, as interest rates rose during the week. The 30-year fixed-rate mortgage rose to 4.39 percent, the highest rate since May 2014, according to the MBA.
"Following last week's [Federal Open Market Committee] meeting, interest rates continued to inch up, as the end of QE [quantitative easing] was confirmed, and investors anticipate the first increase in short-term rates by the middle of next year," says Fratantoni.
Source: “U.S. Mortgage Applications Fall in Latest Week: MBA,” CNBC (Sept. 24, 2014)
Updated: July 20, 2018