Refinancing volume dipped to its lowest level since June 2009 and prompted overall mortgage application volume to drop 3.8 percent on a seasonally adjusted basis, the Mortgage Bankers Association reported Wednesday. Total mortgage application volume – which also includes applications for home purchases – is now nearly 31 percent lower than the same week a year ago.
As mortgage rates have inched up, refinance applications have continued to fall, dropping 3 percent last week. Volume is about half what it was a year ago, when mortgage rates were lower. However, the sharp decrease also had roots in a change with Veterans Administration loans.
"One driver of the drop in volume last week was a sharp decrease in VA refinance applications, which fell more than 17 percent," says Mike Fratantoni, MBA's chief economist. "On Feb. 1, Ginnie Mae implemented new criteria regarding the inclusion of VA-streamlined refinances in certain mortgage-backed-security pools, and this likely led to a decrease in streamlined refinances last week."
Purchase applications—a gauge of future home-buying activity—dropped 5 percent from a week earlier, but they're 3 percent higher than a year ago.
Real estate pros are reporting strong buyer interest, but they say home prices are significantly higher than a year ago and supply is greatly limited. More borrowers are being drawn to adjustable-rate mortgages to try to snag a lower interest rate.
Meanwhile, the 30-year fixed-rate mortgage decreased from 4.35 percent to 4.32 percent last week, MBA reports.
Source: “Mortgage Applications Drop 3.7% as Refinancing Hits 8-Year Low,” CNBC (Feb. 15, 2017)
