Mortgage applications jump 17% on lower rates
Interest rate declines spark a spike in mortgage borrowing.
NEW YORK (CNNMoney.com) -- Borrowers streamed back into the mortgage market last week as loan applications jumped nearly 17%, according to a regular survey from the Mortgage Bankers Association.
"Rates were going down last week," said Keith Gumbinger of HSH Associates, a publisher of mortgage information. "There were people, especially homeowners wanting to refinance, waiting to pull the trigger. And as soon as the number went down, they did."
The MBA reported that refinancings accounted 46.9% of all applications, up from 42.6% the week before.
Gumbinger also cited pent-up demand for loans as a factor in driving up applications. That could have carried over from the week ended October 17 when applications dropped nearly 17%, an almost mirror image of last week's rise.
At that time, Freddie reported that rates were near 6.5% - the highest they'd been since August. Many potential borrowers thought that was just too high and decided to wait, according to Orawin Velz, Associate Vice President of Economic Forecasting in the Research and Economics group for the MBA.
But when they fell last week, borrowers pounced.
"They didn't want to miss the chance at the lower rates," said Velz.
Applications were still 30% lower than for the same week a year ago, and Velz said it's unlikely that the jump in mortgage applications indicates any kind of upturn in the housing market, which is still seeing record home price drops.