Mortgage applications increase as rates drop

September 9th, 2013

More Americans are applying for home loans because of the reduced rates

For a while, mortgage rates were on an incline and it was unclear when the trend would reverse. Fortunately, they have now been falling for a few weeks, and as a result, more Americans are applying for home loans.

The Mortgage Bankers Association recently released its seasonally adjusted index of mortgage application activity, which grew 1.3 percent during the week ending Aug. 30, Reuters reported. The index includes measures of both refinancing and home purchase demand.

This is a positive change for the housing market after loan applications slid the previous weeks. For instance, during the week ending Aug. 23, the index dropped 2.5 percent. An increase in applications suggests the housing recovery is still going strong and has not been harshly affected by increasing mortgage rates.

A decrease in rates also encouraged homeowners to refinance their loans, the MBA report found. During the final week of August, the organization’s refinance index shot up 2.4 percent. Overall, refinances made up 61 percent of all mortgage activity during that time, a week-over-week gain of 2 percent.

It is unclear how rates will perform in the near future, and it will depend on whether or not the Federal Reserve chooses to end its stimulus program.