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Mortgage applications drop significantly mid-May

Posted on Wednesday, May 15, 2013 at 10:40:42 AM

Following the substantial increase of mortgage rate averages last week, fewer individuals recently took actions toward obtaining residential financing. Even though interest levels appreciated, market conditions still largely favor buyers, and consumers should not be deterred from pursuing a property purchase or refinance.

Within its latest Weekly Mortgage Applications Survey, the Mortgage Bankers Association announced the seasonally adjusted measure of loan application volume declined 7.3 percent during the week ending May 10. The unadjusted Market Composite Index also showed a decrease, dropping 7 percent from the preceding week.

The recent slip may have been due to reported rises in average contract interest rates, as 30-year fixed-rate mortgage (FRM) products with conforming loan balances of $417,500 or less ticked up to 3.67 percent last week, from its former level of 3.59 percent. In addition, 15-year FRMs increased to 2.88 percent from the previous week's reading of 2.81 percent. 

During the month of April, when residential lending conditions were even more advantageous for consumers, considerable improvements were seen within the national housing market. According to Realtor.com, average prices of properties listed jumped about 2.6 percent, while the inventory of homes included on the website hiked more than 4 percent to total 1.75 million.

As the national housing market and overall economy continue to show signs of improvement, an increasing number of consumers may decide to pursue the path to homeownership and research financing options.