Housing Market Resumes This Downtrend
Despite a slight improvement in interest rates, mortgage applications and refinancing activity declined in the latest update from the Mortgage Bankers Association. For the week ended January 24, 2014, applications for home loans decreased 0.2 percent on a seasonally adjusted basis from one week earlier.
On an unadjusted basis, mortgage applications plunged 9 percent 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. The Refinance Index and Purchase Index both declined 2 percent from the previous week. Meanwhile, the unadjusted Purchase Index decreased 3 percent compared with the previous week and was 12 percent lower than the same week one year ago.
Overall, the refinance share of mortgage activity accounted for 62 percent of total applications, down from 64 percent a week earlier, which was the highest level in a month. Interest rates have rebounded higher in recent months, but a disappointing jobs report earlier this month could keep rates under control for the near future as the Federal Reserve maintains a loose monetary policy. In December, the U.S. economy added only 74,000 jobs, the smallest monthly gain in three years and a far cry from the 200,000 jobs estimated by economists.