Soon after the Mortgage Banker’s Association reported a 4.8% decrease in mortgage applications for the week ending Feb. 26, analytics firm Capital Economics put out a report suggesting that this decline is not a sign that housing demand is tailing off, according to HousingWire staffer Kelsey Thompson.

Since mortgage affordability should remain favorable and more Americans have jobs, applications are set to rise this year, according to the Capital Economics report.

In February, total mortgage applications rose by 17% month-over-month, preceded by a month-over-month increase of 10.7% in January. The improvement was driven by a surge in of applications for refinance, which increased by 34.1%.

The report explains the reason for the increase in refinancing, saying the turmoil in financial markets in February led to a flight to safe assets, which pushed the 10-year Treasury yield below 1.8% during the month. In turn, that caused the 30-year fixed mortgage rate to fall to 3.86%, causing homeowners to refinance.

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