US Mortgage Applications, the weekly survey conducted by the Mortgage Bankers Association of America which covers all mortgage applications during the week, displayed its 5th week of consecutive increase, this time by 2.8%.
These increases as of late can likely be attributed to the 30 and 15-year fixed-rate mortgages falling from 7.79% and 7.03% in late October to 7.22% and 6.56% today. This, In turn, has meant applying for a mortgage is cheaper than it was almost 2 months ago and so this has spurred demand from those who were postponing taking out a mortgage at the time.
The Refinance Index, also produced by the MBA, saw a notable rise this week of 13.88% compared to an almost 9% drop last week. This suggests that demand for mortgages was not necessarily from those purchasing new homes but also those refinancing their existing homes. This, in my opinion, could be the start of a wider trend which may cause a downtrend in consumer spending as households have less disposable income to spend on discretionary purchases.
Going forward, it would be interesting to see if an upward trend in the refinance index picks up momentum as this may not just skew the mortgage applications, it may, as I say, have wider implications on the domestic US economy...
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