What a difference a week makes…
Mortgage application volume slipped for the second week in a row, falling a whopping 38.8 percent on a seasonally adjusted basis during the week ending January 23, the MBA reported today.
On an unadjusted basis, the home loan application index was off 46.5 percent from one week earlier and 40.4 percent compared with the same week a year ago.
The precipitous decline was led by a 48 percent drop in refinance applications, offset partially by an 8.8 percent increase in FHA lending and VA loans.
The refinance share of mortgage activity decreased to 72.8 percent of total application volume, down from 83.3 percent a week earlier.
Interest rates actually decreased on fixed-rate loans, with the 30-year averaging 5.22 percent, down from 5.24 a week earlier, while the 15-year fell a single basis point to 4.98 percent.
But the damage had already been done, as evidenced by the huge decline in refinance applications, which are clearly driving this new boom.
I would gesture to say that most savvy borrowers are holding out for even better mortgage rates, which seem a certainty at this point.
Unfortunately, banks and lenders are probably spinning their wheels and losing money thanks to all the yo-yoing taking place, not to mention all the declined apps.
Interestingly, the adjustable-rate share of activity increased to 2.4 percent from 1.5 percent of total applications, an unexpected move considering the love of fixed-rate mortgages at the moment.
And that’s with the one-year ARM averaging 5.96 percent, up from 5.89 percent a week earlier.
In related news, the bankruptcy cram down legislation cleared the house panel, suggesting that interest rates could become even more volatile if such a measure becomes law.
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