The week ended December 10, 2010 showed a drop in the number of mortgage loan applications and mortgage refinancing requests in the U.S. According to the Mortgage Bankers Association (MBA), applications for loans were down by 2.3% during the week. Last week, overall mortgage activity declined by 0.9% in the whole country.
For refinancing requests, the volume recorded a decline of 0.7% during the week ended December 10 compared with the previous seven-day period. According to MBA, this marks the fifth week in a row that refinancing activities have plummeted. Last week's refinancing activity drop was at 1.4%.
In terms of applications for home purchasing loans, seasonally adjusted figures showed a decrease of 5% for the latest week. The decrease follows a rise of 1.8% recorded in the previous week. The purchase index of the MBA showed a 16.6% decline when compared with the same week of 2009.
The data presented by the association also showed that out of the total number of mortgage loan applications recorded during the week in focus, over 76% were for mortgage refinancing. The figure is a bit higher than the previous week, wherein 75.2% of total applications for loans were for refinancing already existing loan mortgages.
Mortgage industry experts have stated that the decline in mortgage loan activities was mainly due to the rise in mortgage loan rates. During the December 10 week, rates for 30-year mortgages climbed to an average of 4.84% from a rate of 4.66% recorded a week earlier. The current rate is the highest recorded since the early part of May 2010 and marks the fifth week in a row that mortgage loan rates have climbed. However, most industry experts still consider the current rate as nearer to an all-time low.
Meanwhile, some home builders have reported increased home buying activities despite the rise in rates and declining mortgage activities. According to them, a number of home buyers are probably thinking that now would be a good time to buy since rates will likely increase further in the coming weeks.
They also expect people seeking mortgage refinancing to take advantage of the current rates before they increase further. After all, industry experts have stated, they cannot wait interminably in the hope of further rate decreases.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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