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Fewer Refinances Cause Home Loan Applications to Dip

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Fewer Refinances Cause Home Loan Applications to DipThe number of home loan applications across the country declined once again in the week ending February 4, this time by a seasonally adjusted 5.5 percent, according to the latest weekly statistics from the Mortgage Bankers Association. Overall, refinances fell 7.7 percent, while applications for new purchases sank 1.8 percent.

“Mortgage rates increased last week as many incoming economic indicators continue to show stronger growth than had been anticipated. Refinance volume continues to be low, as fewer homeowners with equity have any incentive to refinance,” said Michael Fratantoni, MBA’s vice president of research and economics. “We are at the beginning of the spring buying season, but purchase volume remains weak on a seasonally adjusted basis.”

[Related Resource: Misconceptions May Keep Homeowners From Getting Low-rate Refi’s]

The total share of the mortgage market for refinances also dipped once again last week, this time to 66.6 percent, down from the 69.3 percent observed a week ago, the report said. The decline brought the total to its lowest point since May 2010.

The declines also brought the four-week moving average for the total market down by 0.9 percent, the report said. In that time, refinances have dipped 1.5 percent, while purchases are 0.8 percent lower.

Increases in mortgage rates around the country may deter many homeowners from refinancing, but they often pay considerably more per month on their existing home loan than they would with current APRs.

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