Mortgage Apps: Modest Declines Despite Further Rate Drop

Bottom Line: Despite the 30-year mortgage rate falling to 4.65% last week, about 20bps below year-end levels, mortgage applications for both purchasing and refinancing fell. On a trend basis the purchase applications continue to bear watching as they have accelerated modestly higher this year. However, the strength we saw earlier this year as rates dipped back below 5% seems to have lost some momentum, even as rates have fallen further. The trend in refinancing remains down with volumes extremely muted, despite a slight bounce earlier this year. Overall, mortgage purchase applications remain the segment to watch - for now the strength we saw earlier in the year is abating a bit but bears watching. The MBA Mortgage Applications Index FELL by 3.7% during the week ended February 8 to 364.8, modestly above its 13 week average of 353.0 but 8.7% BELOW its year ago level. The Purchase Index FELL by 6.4% to 237.7, modestly below its 13 week average of 249.2 and 1.1% BELOW its year ago level. The Refinance Index FELL by 2.3% to 1,052. With this decline, refinancing activity is sharply above its 13 week average of 930 but 17.4% BELOW its year ago level. Contract Mortgage Rates FELL with the 30-year fixed rate declining by 4 bps to 4.65% and with the 15-year fixed rate declining by 7 bps to 4.04%.