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Applications drop amid lower rates

March 7, 2011 - Though families planning their relocation last week encountered lower mortgage rates, many still appeared to hold off on securing a mortgage.

New data from the Mortgage Bankers Association dropped during the week ending February 25 even though home loans became more affordable. Demand for purchase applications declined 6.1 percent while refinance loans fell 6.5 percent. Total mortgage volume also dropped 6.5 percent from the previous week, and the four-week moving average for total application activity was down 2.5 percent.

These drops came despite the average interest on a 30-year fixed-rate mortgage declining to 4.84 percent, while the rate on a 15-year loan fell to 4.17 percent.

The report noted that it did not adjust the data for the President's Day holiday, so much of the fading mortgage demand could have been because a number of lenders were actually closed that workday.

Experts told the New York Times buyers planning on moving should probably consider looking for a mortgage sooner rather than later. Proposals by the Obama Administration to make loans offered through Fannie Mae and Freddie Mac more pricey could take effect soon, meaning interest rates on those home loans could escalate by at least a quarter of a percentage point.
 

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