// Financial Institution Insights

Press release earlier this year indicates lending application decrease.

Survey indicates a decrease in applications although should this cause concern?

The headline on this press release, “Mortgage Applications Decrease in latest MBA Weekly Survey,” might lead one to believe that “the sky is falling” in the mortgage industry. But the numbers in the article show a 2 percent, seasonally adjusted, decrease in applications. The fluctuations here are small changes, week over week, which are insignificant. What matters most is month to month or quarter to quarter changes, allowing for seasonal adjustments.

Going deeper into the numbers, if we group numerous statistics together, it’s not as concerning as the title leads us to believe. Although, one statistic I found interesting is the share of refinance activity dropping to a level last seen in late 2008. This is a very significant, and surprising statistic given the positive rate environment we have experienced over the last few years. However, the number of refinances had to eventual hit a peak. With the new Washington administration, it’s unknown how future policy changes could impact this in the coming months. I’m hopeful the mortgage industry will remain strong and stable given the potential changes ahead. 

In addition to the decrease in mortgage applications, this article provides many other thought-provoking statistics. I recommend paying closer attention to statistics related to seasonal adjustments and quarter over quarter changes, as it paints a better picture into the industry and what is really happening or trending right now.

Full article.https://www.mba.org/2017-press-releases/february/mortgage-applications-decrease-in-latest-mba-weekly-survey-x165735

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