Loan Demand Showing Huge Volatility
Mortgage applications for refinancings and home purchases have made big swings in recent weeks – both up and down. In the latest week, total applications dropped 6.7 percent week to week on a seasonally adjusted basis, which follows the previous week’s double-digit jump in volume.
The average 30-year fixed-rate mortgage fell to 4.08 percent for the week ending Sept. 25, down just slightly from 4.09 percent the prior week, according to the Mortgage Bankers Association.
But "once again, the weekly average mortgage rate is not telling the story regarding mortgage application volume," says Michael Fratantoni, chief economist for the MBA. "The prior week included days with much lower rates due to volatility around the Fed's announcement that drove refinance volume up. Last week, a more stable rate produced less volume, as rates at this level just do not provide an incentive for most home owners to refinance."
Broken out, refinance applications fell 8 percent from the previous week, while applications for home purchases dropped 6 percent from one week earlier. Purchase applications, however, are 20 percent higher than the same week one year ago.
Still, the week-to-week drop in home purchase volume may stick around as the housing market enters a traditionally slower buying season. Both signed contracts to buy homes and closed home sales already saw a slowdown in August, according to the National Association of REALTORS®. Also, starting Oct. 3, lenders will face new regulations for disclosing loan information that could delay some closings on some home purchases. Read more: Closing Process Changes: What to Expect
Source: “Weekly Mortgage Applications Drop 6.7% on Interest Rate Swings,” CNBC (Sept. 30
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