Mortgage application rates fell for the week ending October 21, 2016, according to survey data from the Mortgage Bankers Association. The Market Composite Index, which measure national mortgage loan application volumes, dropped by 4.1 percent over this period.
Some have pinned this most recent decrease to a parallel drop in consumer confidence, CNBC reported. Earlier this week, The Conference Board released new data showing a significant fall in this area, with the Consumer Confidence Index dropping to 98.6 in October. The index reached 104.1 in September and 101.1 in August.
"Consumer confidence retreated in October, after back-to-back monthly gains," Lynn Franco, director of economic indicators for The Confidence Board, told CNBC. "Consumers' assessment of current business and employment conditions softened, while optimism regarding the short-term outlook retreated somewhat. However, consumers' expectations regarding their income prospects in the coming months were relatively unchanged."
These concerns over employment and the general state of the economy have led many potential homebuyers to reconsider and put off their house hunts. Those who did file mortgage applications during the week largely applied for 30-year fixed-rate mortgages with conforming balances below the jumbo threshold of $417,000. The average interest rate hovered around 3.71 percent, a small decrease compared to the week prior.
Economists have tied this slight interest rate drop to comments made by European Central Bank President Mario Draghi, who last week said his organization would continue purchasing real estate assets over the next few months.
Contract interest rates for jumbo mortgages with 30-year fixed-rate terms decreased to 3.71 percent from 3.72 percent, as did mortgages backed by the Federal Housing Administration. These loans finished out the week with interest rates in the area of 3.54 percent.
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