Mortgage Rate Drop Stirs Demand

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates dropped sharply last week from the week before. Rates were down across all loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances, mortgages backed by the Federal Housing Administration, and 15-year fixed-rate loans. MBA economist Joel Kan told CNBC the decline was brought on by recent comments from Fed Chair Janet Yellen. “Rates fell last week as a more cautious message from Chair Yellen about the economic outlook and continuing concerns about weaker growth abroad kept demand for U.S. Treasurys high,” Kan said. “The 30-year fixed mortgage rate dropped 8 basis points, the largest single week decline in eight weeks.” Falling rates spurred demand for mortgage applications. In fact, overall demand was up 2.7 percent over the week before – driven by a 7 percent surge in refinance activity. And though purchase demand was down 2 percent from one week earlier, it remains 11 percent higher than at the same time last year. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

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