Rate Drop Causes Spike In Mortgage Demand

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According to the Mortgage Bankers Association’s Weekly Applications Survey, turmoil in the stock market caused interest rates to fall briefly last week, which led to a spike in demand for mortgage applications. In fact, refinance activity – which is more sensitive to mortgage rate fluctuations – was up 17 percent from the week before. Demand for loans to buy homes also saw an increase, rising 4 percent. Purchase application demand is now 25 percent higher than it was during the same week one year ago. Mortgage rates didn’t stay down for long, however. And, by the end of the week, they had returned to where they were the week before. “Although mortgage rates were unchanged for the week, Treasury rates were down sharply early in the week due to the global stock market rout and this led to a significant increase in application volume,” Mike Fratantoni, MBA’s chief economist, said. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

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