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Mortgage Applications Slide Despite Low Mortgage Rates

Demand for home loans slid last week despite mortgage rates hovering around their lowest levels of the year, according to a report issued Wednesday by the Mortgage Bankers Association. The group's seasonally adjusted index of mortgage applications, which tracks requests for home purchase loans as well as refinancing queries, fell 7.3 percent in the week ended November 28, driven completely by a dramatic slide in demand for refinancing loans. While the MBA's gauge of purchase loans actually rose by 2.5 percent last week, a measure of refinancing demand slid 13.4 percent. Typically, lower rates spark a surge in refinance applications, but rate shave been so low for so long now that most homeowners that can qualify for a refinance have already done so. The uptick in purchase loans, meanwhile, offers evidence of the current affordability conditions driven by the low interest rates.

With demand for refinance loans sliding, their share of total mortgage applications fell from 63 percent in the previous week to 60 percent. For the week, 6.7 percent of all loan requests were for adjustable-rate mortgages, or ARMs, while the share of FHA loans slid to 9.3 percent of all requests. Veterans Administrations loan requests, meanwhile, accounted for 9.4 percent of all activity, down sharply from 10.4 percent in the previous week.

December 4, 2014

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