Loan Demand Slows; Blizzard to Blame?

February 3, 2016

The heavy snowfall that blanketed the East Coast last week may be behind a sudden drop in mortgage applications for the period, CNBC reports.

Mortgage application volume for refinancings and home purchases fell 2.6 percent nationwide last week on a week-to-week, seasonally adjusted basis, the Mortgage Bankers Association reported Wednesday. Broken out, applications for refinancings inched up 0.3 percent for the week but remain down 31.5 percent compared to a year ago, when mortgage rates were lower.

Applications for home purchases dropped 7 percent compared to a week earlier. However, purchase applications remain 17 percent higher than the same time a year ago, the MBA reports.

The MBA reports the average on a 30-year fixed-rate mortgage dropped to 3.97 percent last week, from 4.02 percent the week prior. This marked the fourth consecutive week for a drop in mortgage rates.

"Mortgage rates fell below 4 percent in our survey for the first time since October 2015,” says Michael Fratantoni, the MBA’s chief economist. “The jumbo rate also decreased and was at its lowest level since April 2015. Despite the fall in rates, mortgage application activity was likely muted by the major East Coast snowstorm, although refinance activity increased very slightly."

Source: “Blizzard May be Behind 2.6% Drop in Mortgage Applications,” CNBC (Feb. 3, 2016)