Holiday Distracts Refi, Mortgage Shoppers
Home owners didn’t seem to want to carve out a lower mortgage rate for Thanksgiving. Last week’s holiday week marked a slow one for mortgage applications, attributed mostly to a plunge in refinancing activity, even as mortgage rates dropped to an 18-month low.
Refinancing activity dipped 13.4 percent in the week ending Nov. 28, while loan applications for home purchases, viewed as a gauge of future home buying activity, rose 2.5 percent, according to the Mortgage Bankers Association’s seasonally and holiday-adjusted index. Loan applications for home purchases is still 4 percent below year-ago levels.
Overall, the MBA’s index of mortgage application activity, reflecting both refinances and home purchase demand, dropped 7.3 percent last week.
Meanwhile, the average 30-year fixed-rate mortgage dropped from 4.15 percent to the previous week to 4.08 percent, the lowest since May 2013, the MBA reports.
Refinance activity is 16 percent below levels from a year ago.
"Interest rates dropped through the course of last week, but the holiday likely delayed home owners from acting on that drop in rates to refinance,” says Michael Fratantoni, the MBA’s chief economist. “We would need rates to drop back below four percent to generate substantial refinance activity."
Source: “Mortgage Refinancing Falls Despite Rates at 18-Month Low,” CNBC (Dec. 3, 2014)