Tags: mortgage applications | home loan demand | housing | buyers

Mortgage Applications Plunge 6.7 Percent as Rates Stay Volatile

Mortgage Applications Plunge 6.7 Percent as Rates Stay Volatile
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By    |   Wednesday, 30 September 2015 10:58 AM

Applications for U.S. home mortgages tumbled more than 6 percent last week as both purchase and refinancing applications slid amid volatile interest rates, an industry group said

The volume of applications decreased 6.7 percent in the week ending September 25 from a week earlier, according to the Mortgage Bankers Association (MBA).

The decline follows a 13.5 percent jump the previous week as rate volatility surrounding the FOMC meeting prompted the biggest gain in applications in eight months.

The volatility is because interest rates are swinging relatively widely day-to-day, due to unstable U.S. stock market and overseas financial markets.

This, however, does not show up in the weekly averages: The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.08 percent from 4.09 percent, with points remaining unchanged from 0.45 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans, CNBC explains.

"Once again, the weekly average mortgage rate is not telling the story regarding mortgage application volume," said Michael Fratantoni, chief economist for the MBA. "The prior week included days with much lower rates due to volatility around the Fed's announcement that drove refinance volume up. Last week, a more stable rate produced less volume, as rates at this level just do not provide an incentive for most homeowners to refinance."

Refinance application volume decreased 8 percent from the previous week, on a seasonally adjusted basis. Applications to purchase a home, which are less rate-sensitive, fell 6 percent from one week earlier but are 20 percent higher than the same week one year ago, according to the MBA.

Lower purchase volume seems to indicate that the slowdown in home buying will continue. Both signed contracts to buy homes and closed home sales fell more than expected in August, according to the National Association of Realtors. Fall is traditionally the start of the slower housing season, but this year the signs point to a bigger slowdown than usual.

Home lenders will soon face new regulations for disclosing loan information. While they have had considerable time to adapt their systems, some expect that could stall closings on some home purchases and even deter certain borrowers from applying for a mortgage refinance, CNBC reported.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

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Applications for U.S. home mortgages tumbled more than 6 percent last week as both purchase and refinancing applications slid amid volatile interest rates, an industry group said
mortgage applications, home loan demand, housing, buyers
385
2015-58-30
Wednesday, 30 September 2015 10:58 AM
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