Mortgage Rates Dip But So Does Demand

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According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell last week across all loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. But despite the drop in rates, both refinance and purchase demand fell from the week before. In fact, the Refinance Index dropped 12 percent and the Purchase Index was down 3 percent. Still, purchase activity remains 14 percent higher than one year ago, indicating a stronger spring selling season than last year. Mike Fratantoni, MBA’s chief economist, told CNBC that, with the decline in refinance activity, the mortgage market is once again dominated by demand for loans to purchase homes. But though recent rate increases have led to a downturn in refinance activity, it is still just one percent lower than it was at the same time last year. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. Last week’s results include an adjustment for the Memorial Day holiday. More  here.

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