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Mortgage applications rebound 5.8%, as interest rates ease off recent highs

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Mortgage applications rebound 5.8%, as interest rates ease off recent highs

The new year brought a new sense of caution among investors that in turn caused interest rates to pull back after a month of marching higher.

That was enough to put a little juice back into the mortgage market: Total mortgage application volume increased 5.8 percent on a seasonally adjusted basis last week from the previous week. The Mortgage Bankers Association included an adjustment for the New Year’s holiday. Application volume, however, is 25 percent below year-ago levels.

Applications to refinance a home loan, which are most rate-sensitive, rose 4 percent for the week, seasonally adjusted, but are 32 percent lower from the same week a year ago. Refinance volume had been falling steadily since economic ebullience following the presidential election of Donald Trump drove investors to the stock market and out of the bond market. Mortgage rates loosely follow the yield on the U.S. 10-year Treasury, which hit a two-year high.

“Ten-year Treasury yields fell the week following New Year’s Day as markets continue to adjust their expectations about the incoming administration and Federal Reserve policy,” said Lynn Fisher, MBA vice president of research and economics.