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Mortgage Applications Fall 4.3 Percent as Refinances Slow

Image: Mortgage Applications Fall 4.3 Percent as Refinances Slow

By    |   Wednesday, 24 Feb 2016 01:20 PM


Mortgage applications decreased 4.3 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending February 19. 

This week’s results include an adjustment to account for the President’s Day holiday.

The refinance share of mortgage activity decreased to 61 percent of total applications from 64.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.8 percent of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 3.85 percent from 3.83 percent.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.12 percent from 3.11 percent.

"The dollar volume of refinance applications decreased by 26 percent, while refinance applications based on loan count decreased 17 percent, indicating that the volume of larger loans dropped to a greater extent than smaller loans," Michael Fratantoni, chief economist for the MBA, told CNBC. "The average loan balance declined about 10 percent across all refinance loans."

Meanwhile, despite expectations of Federal Reserve interest rate hikes, U.S. home prices are likely to rise 5 percent this year, followed by nearly as solid gains in 2017, a Reuters poll found.

The Fed hiked interest rates for the first time in a decade in December but the housing market remained robust, with home resales reaching a six-month high in January.

In 2015, home prices also gained 5 percent, despite widespread expectations of a Fed interest rate rise, according to the S&P/Case Shiller composite index of prices in 20 metropolitan areas.

For 2016, the S&P/Case Shiller index was seen rising 5.0 percent, according to the median expectation in a poll of 24 analysts. That compared with the 4.0 percent forecast in December's poll.

Nine of the 14 common contributors between the two polls upgraded their forecasts, two left them unchanged while the rest downgraded.

In 2017, home prices will rise 4.0 percent, followed by 3.5 percent in 2018, the poll suggested.

"The housing recovery is quite sustainable in the U.S. and should continue at a moderate rate through this year and next," said Sal Guatieri, a senior economist at BMO Capital Markets.

"We just don't see interest rates rising meaningfully to slow the markets that much. Mortgage rates are likely to remain low in even if the Fed raises interest rates slowly," he added.

(Newsmax wire services contributed to this report).

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Mortgage applications decreased 4.3 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending February 19.
mortgage, applications, home loan, demand
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2016-20-24
Wednesday, 24 Feb 2016 01:20 PM
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