Mortgage Applications Fall, Now Wait-and-See
Total mortgage applications for refinancing and home purchases dropped 2.6 percent last week, before the after-effects of the Brexit storm swept through markets, the Mortgage Bankers Association reported Wednesday. Despite the drop, mortgage applications remain nearly 38 percent higher than a year ago, when interest rates were much higher. 
Housing analysts are closely watching mortgage applications and interest rates to see the aftermath of Britain’s vote to leave the European Union and how that could shake out in U.S. and global markets. Economists are largely predicting that mortgage rates will fall even further from current three-year lows.
Mortgage application volume lately has mostly been fueled by an increase in refinance applications. Refinance applications dropped 2 percent last week compared to the prior week but are still 63 percent higher than a year ago. Applications for home purchases, meanwhile, dropped 3 percent last week and are 13 percent higher than a year ago.
The average on 30-year fixed-rate mortgages was 3.75 percent last week, the lowest level since May 2013. Loan officers were reporting Monday that after the Brexit vote, mortgage rates have fallen more as investors sold off stocks and headed to the bond market, looking for more financial safety.
"The Brexit vote led to a large drop in Treasury rates, about 20 basis points initially and an additional 10 basis points on Monday, before stabilizing somewhat on Tuesday," says Michael Fratantoni, chief economist for the MBA. "Whether the impact of Brexit will be contained to the initial shock of the 'Vote Leave' victory or will have a longer-term impact on markets is unclear, as even the terms and conditions of the United Kingdom's withdrawal from the EU remain to be seen. The MBA's best guess at this point is that the impact on the mortgage market will be to keep mortgage rates lower for longer, leading to another pickup in refinance activity in the near future."
Source: “Before Brexit Storm, Mortgage Applications Fell 2.6%,” CNBC (June 29, 2016)
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