Loan Demand Dips As Rates Rise
A sharp rise in mortgage rates dampened mortgage application volume last week, the Mortgage Bankers Association reports. Total mortgage application volume for both refinancings and home purchases fell 3.5 percent on a seasonally adjusted basis for the week ending May 8. Still, volume is 14 percent higher than a year earlier.
Broken out, applications for refinancings attributed to most of the drop in loan demand last week. Refinancing applications fell 6 percent week-over-week and have fallen 16 percent in the past four weeks alone, MBA reports. Applications for home purchases, which are viewed as a leading indicator of future home sales, mostly held steady last week, down just 0.2 percent from the previous week. Applications for home purchases are 12 percent higher than a year earlier.
MBA reports that the 30-year fixed-rate mortgage rose to 4 percent last week; it had averaged 3.93 percent the week prior.
"Just a few short weeks ago, the average rate was 3.625 percent. That makes this the most abrupt move higher in roughly two years," Matthew Graham of Mortgage News Daily told CNBC.
Still, some housing analysts say they don't believe the weakness in mortgage applications for home purchases is being caused by the higher interest rates but more so from the fact there's fewer homes for sale. The tight inventories in many markets may be the bigger culprit, they say.
Source: “Weekly Mortgage Applications Fall 3.5% as Rates Rise,” CNBC (May 13, 2015)