Mortgage application volume dropped sharply over the holidays, despite a drop in mortgage rates at the end of the year. Loan applications fell 12 percent for the week ending Dec. 30, 2016, on a seasonally adjusted basis compared to two weeks earlier, the Mortgage Bankers Association reported Wednesday. (The MBA did not report weekly volume last week.)
"As mortgage rates continued their upward climb reaching the highest levels in more than two years, overall application volume fell even more than the holiday slowdown would suggest," says Michael Fratantoni, the MBA’s chief economist.
Applications to refinance a home plunged 22 percent on a seasonally adjusted basis during the two-week period, the MBA reported. Refinance applications ended the year 13 percent lower than a year ago.
Applications for home purchases, meanwhile, dropped by a more modest 2 percent during the two-week period. Home purchase applications ended the year 1 percent lower than a year ago.
"The composition of application activity continued to shift away from refinance towards purchase,” says Fratantoni. “The refinance share of applications was around 52 percent over the last two weeks, the lowest level since July 2015.”
Meanwhile, the average 30-year fixed-rate mortgage fell from 4.45 percent to 4.39 percent, the MBA reports.
Source: “Mortgage Applications Tank 12% to End 2016,” CNBC (Jan. 4, 2017)