The regime of very low interest rates in the United States had not raised enough optimism among home buyers as indicated in the 2.9 percent decline in mortgage applications, according to the latest statistics from Mortgage Bankers Association (MBA).
Data from MBA said that on a seasonally adjusted basis, the Market Composite Index, a measure of mortgage loan application volume, had declined close to 3 percent. Nonetheless, the unadjusted Purchase Index increased 17.1 percent compared to the previous week and was 4.3 percent lower than the same week one year ago.
According to Michael Fratantoni, MBA’s Vice President of Research and Economics, the markets reacted negatively to the announcement of the Federal Reserve to maintain short-term rates at its current levels of zero and 0.25 percent until 2014.
He said that although total application volume declined on an adjusted basis relative to last week, refinance applications volume remains high.
Frantantoni noted that survey respondents were encouraged to apply to the federal government’s expanded Home Affordable Refinance Program (HARP). The HARP contributed to roughly 10 percent of their refinance activity.
The MBA survey recorded an 80 percent increase in refinance applications in the state of Connecticut over the December 2011 period from November. Every state in the US saw an increase in refinance volume.
In terms of home purchase activity, the state of Maine saw an increase of 30.8 percent in applications, which is the largest noted among the 52 states. The survey listed only 12 states registered declines in home purchase activity.