“The 30-year mortgage rate fell this week for the first time since the presidential election, dropping 12 basis points to 4.20 percent,” Sean Becketti, Freddie Mac chief economist, said in a statement. “This marks the first time since 2014 that mortgage rates opened the year above 4 percent. Despite this week’s breather, the 66-basis point increase in the mortgage rate since November 3 is taking its toll — the MBA’s refinance index plunged 22 percent this week.”

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The retrenchment comes as investors are beginning to temper their enthusiasm. The post-election climb of home loan rates and sell-off in the bond market was attributed to investors’ beliefs that the new administration would spend freely to boost the economy. Now reality is setting in.

“The run-up in bond yields and mortgage rates the last two months of 2016 was too much, too soon, and not based on anything concrete,” said Greg McBride, chief financial analyst at Bankrate.com. “Now we get a bit of a pullback as investors realize we’re still in a slow-growth economy with an aging population and lousy productivity growth.”

While Friday’s employment report could send rates back up, experts appear mixed on where mortgage rates are headed. Bankrate.com, which puts out a weekly mortgage rate trend index, found the experts it surveyed were almost evenly split. Nearly a third said rates would go up, another third said they would go down and the rest said they will remain relatively unchanged, moving less than plus or minus two basis points. (A basis point is 0.01 percentage point.)

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Meanwhile, higher rates and the holidays sent mortgage applications tumbling last week, according to the latest data from the Mortgage Bankers Association. The market composite index — a measure of total loan application volume — dropped 12 percent from two weeks ago. The MBA did not report application data last week because of the holiday. The refinance index fell 22 percent, while the purchase index slid down 2 percent.

The refinance share of mortgage activity accounted for 52.2 percent of all applications.

“Mortgage application volume typically drops sharply over the holidays,” said Michael Fratantoni, MBA’s chief economist. “However, this year, as mortgage rates continued their upward climb reaching the highest levels in more than two years, overall application volume fell even more than the holiday slowdown would suggest, dropping 12 percent over the two week period on a seasonally adjusted basis. The composition of application activity continued to shift away from refinance towards purchase. The refinance share of applications was around 52 percent over the last two weeks, the lowest level since July 2015. Applications to refinance decreased 22 percent over the past two weeks, even after accounting for the effects of the holidays.”

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The MBA also released its credit availability index this week that showed lending standards loosened in December. The MCAI increased 0.6 percent to 175.2 last month.

An increase in the MCAI indicates that lending standards are loosening, while a decline signifies tightening of credit.