Categorized | Finance and Mortgage

Mortgage Applications Take a Significant Hit

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The number of mortgage applications in the United States fell by five percent in comparison to the previous week. While the four week average is still up from the previous four weeks, the most recent decline is still a bit of a let down for those that were expecting the market to show strong signs of recovery.

Refinance applications were also down from the previous week. One of the reasons why both refinancing and mortgage applications dropped was that the interest rates for 30-year fixed loans, 15-year fixed loans, and adjustable-rate mortgages all increased in the past week.

Those applying for mortgages are still opting for 30-year fixed loan mortgages. In fact, more than fifty-six percent of mortgage applications in December of 2011 were for fixed-rate 30-year mortgages. Twenty-four percent of those applications were for fixed-rate 15-year mortgages. The remainder of the mortgage applications was made up of adjustable-rate mortgages.

Mortgage levels had hit their highest point in years just last week when the contract interest rate for 30-year fixed-rate mortgages hit its lowest percentage ever. In the most recent week, that rate increased by six percentage points, thus contributing to the decline in applications.

Analysts had hoped that the previous week’s spike in mortgage applications was a sign that the market was ready for a full recovery. However, the current week’s decline brings them back to reality. Most reports continue to indicate that real recovery in the United States residential real estate market will not take place until 2013 at the earliest.

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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