Mortgage Refinancings Ebb in July 4 Week
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Mortgage Refinancings Ebb in July 4 Week
Reuters
Mortgage Refinancings Ebb in July 4 Week
Wednesday July 9, 7:29 am ET
By Aleksandrs Rozens
NEW YORK (Reuters) - Demand in the United States for loans to buy homes and refinance mortgages fell in the July 4 holiday week as interest rates crept higher, an industry group reported on Wednesday.
The drop in applications for mortgage loans was, in part, due to the holiday weekend that lured Americans to beaches and parks.
The Mortgage Bankers Association of America said its measure of demand for refinancings, the refinancing index, fell 21.3 percent to 6,768.3, while its gauge of demand for loans to buy a home, the purchase index, fell 5.5 percent to 414.1.
"We adjust as best as we can for the holiday affect. It is mostly the higher rates," said Douglas Duncan, the association's chief economist, adding that some of last week's decline in activity was also due to the July 4 U.S. Independence Day holiday.
The trade group's measure of overall lending activity, the market index, fell 17.7 percent to 1,346.3 and 30-year loan contract rates rose to 5.37 percent in the July 4 week from 5.23 percent in the previous week. The record low was 4.99 percent in the June 13 week.
The rise in interest rates will eventually take a bite out of demand for refinancings. "We are past the peak in refinancings. I expect refis to decline over time as rates move up moderately," said Duncan, adding "we have passed the bottom for rates."
While refinancings ebbed, demand for these loans likely won't evaporate overnight.
"There may be a little bit of a scramble to get in before rates continue to climb by people sitting on the fence," said Jake Pasternak, senior economist at Chmura Economics and Analytics in Richmond, Virginia.
"If you are in-the-money to refinance you can refinance even if you have missed the bottom (in rates)," said Amy Crews Cutts, principal economist at Freddie Mac.
Refinancings accounted for 70.3 percent of the latest week's loan applications -- down slightly from 73.9 percent in the previous week.
Low borrowing costs have helped shore up an anemic economy by freeing up cash for consumer spending on home improvements as well as furniture and appliances to equip homes.
In a report published on Tuesday, Freddie Mac economists noted that construction has added 101,000 jobs to the overall U.S. economy since February.
Low borrowing costs have helped fan demand for loans to buy homes, prompting the National Association of Realtors (News - Websites) to increase its expectations for sales this year to eclipse 2002's landmark year.
Mortgage Refinancings Ebb in July 4 Week
Wednesday July 9, 7:29 am ET
By Aleksandrs Rozens
NEW YORK (Reuters) - Demand in the United States for loans to buy homes and refinance mortgages fell in the July 4 holiday week as interest rates crept higher, an industry group reported on Wednesday.
The drop in applications for mortgage loans was, in part, due to the holiday weekend that lured Americans to beaches and parks.
The Mortgage Bankers Association of America said its measure of demand for refinancings, the refinancing index, fell 21.3 percent to 6,768.3, while its gauge of demand for loans to buy a home, the purchase index, fell 5.5 percent to 414.1.
"We adjust as best as we can for the holiday affect. It is mostly the higher rates," said Douglas Duncan, the association's chief economist, adding that some of last week's decline in activity was also due to the July 4 U.S. Independence Day holiday.
The trade group's measure of overall lending activity, the market index, fell 17.7 percent to 1,346.3 and 30-year loan contract rates rose to 5.37 percent in the July 4 week from 5.23 percent in the previous week. The record low was 4.99 percent in the June 13 week.
The rise in interest rates will eventually take a bite out of demand for refinancings. "We are past the peak in refinancings. I expect refis to decline over time as rates move up moderately," said Duncan, adding "we have passed the bottom for rates."
While refinancings ebbed, demand for these loans likely won't evaporate overnight.
"There may be a little bit of a scramble to get in before rates continue to climb by people sitting on the fence," said Jake Pasternak, senior economist at Chmura Economics and Analytics in Richmond, Virginia.
"If you are in-the-money to refinance you can refinance even if you have missed the bottom (in rates)," said Amy Crews Cutts, principal economist at Freddie Mac.
Refinancings accounted for 70.3 percent of the latest week's loan applications -- down slightly from 73.9 percent in the previous week.
Low borrowing costs have helped shore up an anemic economy by freeing up cash for consumer spending on home improvements as well as furniture and appliances to equip homes.
In a report published on Tuesday, Freddie Mac economists noted that construction has added 101,000 jobs to the overall U.S. economy since February.
Low borrowing costs have helped fan demand for loans to buy homes, prompting the National Association of Realtors (News - Websites) to increase its expectations for sales this year to eclipse 2002's landmark year.
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