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Mortgage Applications Surge on Lower Rates
Diana Olick / CNBC.com / January 15, 2013
Mortgage applications jumped sharply last week, as a weaker-than-expected December employment report sent interest rates lower.
Total application volume on a seasonally adjusted basis rose 11.9 percent on the week, according to the Mortgage Bankers Association. Applications to refinance rose 11 percent and applications to purchase a home increased 12 percent, both seasonally adjusted.
The average contract rate for 30-year fixed mortgages with conforming loan balances ($417,000 or less) dropped to 4.66 percent from 4.72 percent. Rates had been rising after the Federal Reserve announced that it would decrease its purchases of mortgage-backed bonds as part of its strategy to “taper” infusions into the economy.
“The drop in rates was large enough to trigger a pickup in refinance volume,” noted Michael Fratantoni, the association’s chief economist. “The increase in purchase volume is more likely reflecting an increase coming out of the holidays, beyond what our seasonal adjustment model anticipated.”