Mortgage Rate Drop Spurs Demand

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According to the Mortgage Bankers Association’s Weekly Applications Survey, mortgage rates dropped last week across all loan categories, including 30-year fixed-rate mortgages with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. The drop was the second in as many weeks and caused a spike in demand for mortgage applications. In fact, the Market Composite Index – which measures both refinance and purchase demand – was up 9.5 percent from the week before. The refinance index jumped 12 percent from the previous week, bringing the refinance share of total mortgage activity up to 61 percent from 59 percent one week earlier. The purchase index – which is a good indicator of future home sales – was also up, rising 5 percent compared to a week earlier. Demand for home purchase loans is now 3 percent higher than the same week one year ago. The MBA’s survey has been conducted weekly since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

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