Mortgage applications took a steep downward turn over the last week, falling 10.9 percent. While both new home applications and refinancing applications were down, the quick fall can be attributed to the sharp decrease in refinancing applications. Last week refinancing applications made up only 67.6 percent of total applications, which was down from 71.7 percent from the week prior.
In a statement by the MBA’s vice president of research and economics, Michael Fretantoni said, “refinance activity fell substantially last week. Although rates remain low, there appears to be a smaller pool of borrowers who are willing and able to refinance at today’s rates.”
2009 saw a sharp increase in refinance applications with interest rates at record lows. Even though interest rates have been slowly on the rise, they are still lower than they were a year ago. It appears that homeowners knew the rates would be heading up and those who were interested have already gone through the refinancing process.
Last week’s figures show 15-year fixed rate mortgages at 4.34 percent, up just slightly from the week before figure of 4.33 percent. The 30-year fixed rate came in at 5.02 percent, up from 5 percent the week before. For several months in 2009 interest rates were below 5 percent, showing an all-time low last March when the 30-year fixed rate was 4.61 percent.
In a still struggling economy and housing market, the outlook for continued low rates looks bleak. Rates are not expected to drop anytime soon and in fact are predicted to continue to rise throughout 2010. At the end of March the Federal Reserve is slated to stop buying mortgage related securities which will inevitably send rates upward.