Mortgage activity drops 40 percent after record week

Real Estate Watch

January 06, 2002

Mortgage loan purchases and refinancings dropped 40 percent during Christmas week after posting a record high the previous week, according to a Mortgage Bankers Association of America weekly survey.

During a time of year that's typically slow for the home-buying industry, the MBAA's market composite index plummeted to 329.6 for the week that ended Dec. 28, compared with 548.2 for the previous week.

Refinancing activity represented 50.2 percent of total applications, up from 49.2 percent the previous week.

Mortgage rates, meanwhile, edged downward in many major markets across the country last week.

In its weekly mortgage survey, Freddie Mac, which makes money available to the housing market, reported that the 30-year fixed-rate mortgage averaged 7.14 percent, down from 7.16 percent the previous week.

The average for the 15-year fixed rate mortgage was 6.62 percent, down from the previous week's 6.65 percent. The one-year adjustable rate mortgage was 5.26 percent.

"Coming into the new year, there are some signs that the recession may have already run its course but no indications that inflation looms on the horizon. Thus, mortgage rates remained almost unchanged this week," said Frank Nothaft, Freddie Mac chief economist. "With mortgage rates expected to stay near their current low levels, 2002 shows every promise of being another good year for housing."

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