Drop in Mortgage Rates Results in Increase in Applications

On January 21, 2016

Recently released figures have revealed that there has been a surge in mortgage and refinance loan applications in the United States on the back of falling interest rates. A report was released by the Mortgage Bankers’ Association last week and indicated that mortgage and refinance applications had experienced their biggest weekly jump in three months. Mortgage rates, on the other hand, had fallen from their highest in more than five months according to the data.

The Mortgage Bankers’ Association stated that overall activity relating to mortgage applications increase by more than 21 percent to 398.5 for the week ending 8th January 2016. This was based on seasonal adjustment from the previous week. Information from the company also showed that this was the largest increase since October last year, when figures showed a gain of 25.5 percent.

Newspaper Mortgage RateA drop in mortgage rates encourages more applications

Officials have said that the drop in mortgage rates has encouraged more applications, as consumers try to make the most of falling interest rates. The average rate of interest charged on thirty year fixed rate mortgage loans fell to 4.12 percent from 4.20 percent the previous week, which was the highest since the middle of July last year.

Based on seasonal adjustments, application levels for refinancing loans rocketed by 23.8 percent compared to the previous week, increasing numbers to over 1,380. Again, based on seasonal adjustment, applications for new home loans also increased rising by 17.8 percent to over 231 compared to the previous week.

The Vice President of Research & Economics at the Mortgage Bankers’ Association, Lynn Fisher, said that 2015 had ended on a strong note when it came to the purchase market. She said that the fourth quarter had seen strong growth in jobs as well as continues low rates of interest, which had contributed to the results seen at the end of the year. She also added that it appeared that this success was continuing into the New Year based on the figures and analysis seen so far.

The rise in mortgage applications means that 2016 has got off to a strong start for the mortgage industry with the MBA purchase mortgage application index reaching its second highest level since May 2010. The figures did show, however, that activity when it came to refinancing was actually down by 38 percent compared to a year ago when rates fell below the 4 percent mark.

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