Loan Demand Barely Budges as Rates Drop

Diana Olick  |   July 29, 2015

Mortgage activity rose only slightly last week despite a small drop in interest rates, the Mortgage Bankers Association reports in its weekly mortgage market survey. Total mortgage application volume, reflecting applications for refinancings and home purchases, increased 0.8 percent last week on a seasonally adjusted basis from one week earlier. The increase was mostly driven by an increase in refinance applications, which climbed 2 percent week-to-week. Refinance volume is 6 percent higher compared to one year ago, the MBA reports. Mortgage applications for home purchases, viewed as an indicator of future home sales, were down 0.1 percent from the previous week. However, purchase applications are 17.5 percent higher than a year ago, the MBA reports. "Although total purchase applications were little changed for the week, this resulted from a combination of a small increase for conventional purchase loans and a decrease for government purchase loans," says Michael Fratantoni, chief economist for the MBA. "We continue to see a decline in the average size of purchase loans, further indicating that entry-level buyers are beginning to return to the market." The MBA reports the average 30-year fixed-rate mortgage fell to 4.17 percent last week, the lowest level since June. Mortgage rates had averaged 4.23 percent the week prior.