During the last week of February, mortgage applications declined by 4.8 percent from the previous week. While mortgage rates continue to fall, the mini-boom of refinancing seen during January and early February appears to be over. In addition to new mortgage applications falling, the Mortgage Bankers Association also stated that the number of refinance applications dropped by seven percent from the previous week. Both percentages have been seasonally adjusted.
As rates on thirty-year fixed mortgages have dropped to below four percent since the beginning of the year, more and more homeowners have refinanced their mortgages. However, it appears that, despite the fact that rates continue to drop, many of those who were interested in refinancing have already begun the process. In addition to conventional refinance loan applications dropping, the number of qualified individuals applying for various government refinance options such as VA or FHA loans has also decreased.
The same may be true for those looking to purchase a new home. While the market may be very attractive at the moment, applications dropped by one percent at the end of February. However, compared to the same week in 2015, applications are up by 27 percent. This suggests that the housing market is starting off 2016 in a stronger position.
March may see refinancing continue to slow as rates look to be leveling off after many stock averages sharply increased. This resulted in an increase in the rate of yields from government bonds, which in turn resulted in an increase in interest rates.