Are Mortgage Applications Hinting at Major Trouble?
With interest rates climbing higher, mortgage applications and refinancing activity are still trapped in a downward spiral. In the latest update from the Mortgage Bankers Association, for the week ended February 14, applications for home loans fell 4.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, mortgage applications dropped 2 percent higher from the prior week.
There have only been a handful of increases over the past nine months as the housing market is starting to return to a more sustainable pace. As the chart above shows, mortgage applications are now near their worst level in almost two decades. The Refinance Index also fell 3 percent, while the Purchase Index plunged 6 percent from the previous week. The unadjusted Purchase Index was 17 percent lower than the same week one year ago.
Overall, the refinance share of mortgage activity accounted for 61 percent of total applications, down from 62 percent a week earlier. Interest rates have been on the decline in 2014, but recently moved higher.