Less mortgage application activity was recorded during the week ending January 10, the Mortgage Bankers Association reports.
According to the industry group's Primary Mortgage Market Survey, application activity edged 1 percent lower from the previous week. Meanwhile, the seasonally adjusted Purchase Index dipped 8.4 percent during the same period.
However, despite the dip in activity, mortgage records indicate that refinancing activity increased to the highest level since the week ending January 20, 2012, as it accounted for an 81.1 percent share of all applications. During the previous week, the refinancing share totaled 80.5 percent.
The Federal Reserve recently announced it planned to keep mortgage rates low until at least 2014. As a result, a growing number of borrowers are choosing to refinance their home loans into fixed-rate mortgages to take advantage of the increasing affordability. Meanwhile, the number of borrowers who refinanced their loans in adjustable-rate mortgage fell 5.4 percent to account for 6 percent of all refinance applications.
Recent trends indicate that due to the unstable housing market, more households are opting to stay in their current homes and refinance into lower mortgage rates, rather than attempt to purchase new property. As a result, the nation's inventory has thinned during recent years.
However, according to real estate data from Altos Research, this decline in the housing inventory could prove to be only temporary.
This is due to the delay in the foreclosure process during the past year in the wake of the robosigning scandal. Analysts from the research firm say that the declining inventory is not a result of higher home sales, but rather from less real estate-owned properties hitting the market.
Some local real estate markets have significantly benefitted from the lack of distressed properties adding downward pressure on home prices. For example, in Miami, where the foreclosure rate has been curbed, the median average home price in the areas has surged 7 percent during the last three months to $465,058 - a key indicator that the local real estate market could finally be staging a rebound.
Meanwhile, Las Vegas, which is a marketplace that has devastated as a result of the real estate collapse has been passing legislation to help slow the city's rampant foreclosure rate. Due to the efforts, the area's inventory has recently fallen 38 percent to roughly 11,000 properties - slowing the fall of home prices that had been occurring.