Are Mortgage Applications Finally Showing Signs of Life?
After a steady decline over the past year, mortgage applications finally showed signs of life as interest rates moved lower. In the latest update from the Mortgage Bankers Association, for the week ended April 11, applications for home loans increased 4.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index gained 5 percent.
The report is a pleasant surprise, as there has been a steady slide in mortgage applications over the past year, with the housing market returning to a more sustainable pace. As the chart above shows, applications are still near their worst level in years. The Refinance Index jumped 7 percent from the previous week to rebound from its lowest level since the end of 2013. The Purchase Index managed to increase 1 percent, but on an unadjusted basis, the index was still 16 percent below year-ago levels.
Overall, the refinance share of mortgage activity accounted for 52 percent of total applications, up from 51 percent a week earlier — its worst level in nearly five years. Previous to last week’s gain, the refinance share of mortgage activity had dropped for nine consecutive weeks.