Home Prices Down - Refinances UP

The prices for existing homes are dropping and the market is slumping, but mortgage applications are up. With the recent drop in the interest rate, people are rushing to refinance and take advantage of locking in a lower rate. But fewer seem to be rushing to purchase a home.

Refinance applications were up 92% from November, but purchase applications only 7%. The drop in interest rate has certainly sent people shopping for a better deal on their existing mortgages or trying to get out of ARM mortgages where the interest rate is about to increase.

The decline in housing inventory and house prices isn't generating a rise in sales, however, with most buyers willing to wait, expecting prices to drop lower.

Credit is a bit tighter and conditions for a loan stricter, but if you have equity in your house and are locked into a bad mortgage with a high rate or in an ARM about to balloon, this may be the right time for you to consider a refinance option.