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Application Volume Drops Despite Rate Decreases
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Mortgage applications from U.S. home buyers and homeowners dropped last last slightly despite interest rates being at dramatic lows. Perhaps this can be attributed to the Memorial Day holiday or simply that folks are vacationing more in the past week or so. Nonetheless, we have seen a decay in applications, according to the Mortgage Banker's Association weekly survey.
According to the MBA, the index of mortgage application activity on a seasonally adjusted basis dropped 2.8% to 709.1. This figure offsets the prior week's 4.3% gain.
Segmenting the various types of application volume measures, we see that refinancing applications dropped 1.2 percent to 2142.1, after rising 6.4 percent the previous week. The home loan application purchase index, fell 4.1 percent to 462.7. The previous week this index saw a gain of 2.8 percent.
Last week, the average 30-year fixed interest mortgage rate was at 5.61 percent.
Presently, interest rates are lower than they were in the beginning of April, at which time we sawfixed 30-year mortgage rates at the 5.91 percent level. When compared to one year ago, home loan rates are considerably lower. Back at the end of May 2004, 30 year fixed rates sat comfortably at 6.24 percent. Mortgage rates being as low as they are right now has put a whammy on many predictors' projections that by this time in 2005 they would be significantly higher than they were one year ago.
Getting back to the present, we see that average contract interest rates for 15 year fixed mortgages also tumbled lower last week, dropping to an average of 5.13 percent from 5.24 percent a week earlier. Mortgage refinancing increased as a percentage of all home finance applications, with 41.2 percent of all applicant interest. The prior week revealed that 40.3 percent was the amount of applications attributed to those desiring a low rate refi. - Article by Nolan Voight, Mortgage Industry Columnist.
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