Mortgage Applications Down to End the Year

January 05, 2012

Record-low mortgage rates may not be spurring home-buying activity, but they are helping some existing homeowners get better rates.

According to the Mortgage Bankers Association, mortgage applications for the week ending December 30, 2011 fell 3.7 percent from the week ending December 16. The two-week period accounted for the Christmas and New Year’s holidays.

The drop included a 9.7 percent decrease in the Purchase Index and a 1.9 percent drop in the Refinance Index.

Though there was a dip, homeowners refinancing made up the majority of activity last month, as the refinance share of mortgage activity rose to 81.9 percent of all applications. That was the highest refinance share of 2011.

For the year, refinancing was up more than 60 percent.

“Mortgage application activity declined over the last two weeks, even after adjusting for the typical seasonal decline in activity,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “Refinance applications continue to account for the vast majority of total application volume, with the refinance share reaching its highest level in 2011.”

Fratantoni says the mortgage industry will continue on this pace for at least the beginning of 2012.

“As part of legislation to extend the payroll tax holiday, guarantee fees for loans purchased by the GSEs and mortgage insurance premiums for FHA loans will eventually increase,” he said. “Given the announced implementation of this change, we do not expect to see an impact on mortgage rates and application activity until at least February.”

Categories: Economy, Mortgages

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