As interest rates fall, mortgage applications rise

Since the beginning of the Great Recession in 2008, interest rates have fallen dramatically to combat the lower demand for mortgages and other loans. As rates continue to remain low, mortgage applications are growing in response, and loan processing companies may find risk management software can efficiently process the increased volume of applications.

The Mortgage Banker's Association found that mortgage applications in the first week of December grew on both a seasonally adjusted and unadjusted rate for the fifth consecutive week, and at a rate almost 10 percent higher than this time last year. Refinancing activity also increased, reaching its highest level since 2009. Of those mortgages refinanced, almost a third were through the Department of Treasury's Home Affordable Refinance Program.

The report, which looks at 75 percent of retail residential mortgages, pointed to economic uncertainty as a possible explanation to falling interest rates.

"Continued uncertainty due to the lack of resolution regarding the fiscal cliff led interest rates lower last week, with mortgage rates reaching a new low in our survey," Mike Fratantoni, MBA's vice president of research and economics said in the report. lowercase

Another contributor may be Operation Twist, the U.S. Federal Reserve's recent program to buy long-term bonds while selling short-term to lower interest rates.

Efficiently processing the growing applications

Though interest rates have remained near-zero since 2008, new reports regarding mortgage applications suggest the lowered rates are taking effect. For businesses originating loans, especially during a time surrounded by uncertainty with the fiscal cliff and end of Operation Twist, risk management and loan processing software can be key to effectively handling the growing applications. 

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