Fewer Purchase Applications Causes Sizeable Mortgage Market Decline

Advertiser Disclosure Comments 0 Comments

Fewer Purchase Applications Causes Sizeable Mortgage Market DeclineThe number of applications for new home loans fell by a seasonally adjusted 13.6 percent in the week ending April 22, accounting for a 5.6 percent overall drop in the market, according to the latest statistics from the Mortgage Bankers Association. There was also a slight decrease in the number of consumers who sought to refinance their existing home loan.

[Featured products: Monitor your credit reports and scores]

Overall, refinances dropped just 0.6 percent, and the overall share of the mortgage market for that financial option rose to 61.6 percent, the highest rate in a month, the report said. In the previous week, the refinance share was 58.5 percent.

“Purchase applications fell last week, driven primarily by a sharp decrease in government purchase applications as new, higher FHA premiums went into effect,” said Michael Fratantoni, MBA’s vice president of research and economics. “This decrease reverses a 20 percent increase in government purchase applications over a four week period, which was likely driven by borrowers attempting to beat this deadline.”

[Article: 8 Tips to Make Your Mortgage Process Easier]

The four-week moving average for the mortgage market is down 2.4 percent, largely as a result of fewer finances having been sought as a result of higher interest rates, the report said.

Refinances typically drop when the average mortgage rates approach or surpass 5 percent, as many may believe they won’t save enough money to make such an option financially feasible.

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on News & Advice may also be offered through product pages, and will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.