Mortgage Rates Are Up, So Loan Applications Are Down
Overall, home loan applications dropped 15% last week, compared with the previous week. Refinance mortgage applications dropped 16.5% to their lowest level since July; and purchase loan applications declined by 8.2% last week to a level 11.3% lower than the same week in 2009.
The MBA chalked the drop in applications up to an uptick in home loan rates. "Rates increased sharply last week. Mortgage applications, particularly for refinances, dropped in response," said Michael Fratantoni, MBA's Vice President of Research and Economics. For a 30-year-fixed rate mortgage, rates rose from 4.28% to 4.46% last week; 15-year-fixed loan rates went from 3.64% to 3.87% -- these were the highest rates have been since mid-September.
For those buying homes, a rate increase of less than a quarter of a percent seems slight. Compared with the massive life and financial commitment of buying a home in the first place, this tiny rate increase is a mere drop in the monthly mortgage payment bucket, and certainly wouldn't dissuade someone who had already found their dream home from moving forward with their home purchase.
For the rate-obsessed refi crew, though, the never ending quest for the lowest rate possible continues when rates slide upwards, even in this fractional amount. Many current homeowners looking to refi pulled the trigger when rates dropped to historic lows a few weeks ago. Many more homeowners are likely still biding their time, waiting for the moment that rates take even a slight downward bounce once again -- sitting on pins and needles anticipating the perfect moment to strike and lock in that uber-low refinance rate.