Low Rates, But Few Takers as Mortgage Refinance Apps Sink

Mortgage applicationsA closely-watched index of mortgage applications for home purchases managed a 2.0 percent increase last week, but a measure of  refinance applications sank 6 percent despite historically low interest rates.
The Mortgage Bankers Association update on their two key indices painted a mixed picture for the still sluggish housing market.
The MBA’s seasonally adjusted purchase index nudged upward to its highest level since the end of June.
But its refinance index decreased 5.9 percent from the previous week. The refinance share of mortgage activity decreased to 78.0 percent of total applications, down from 79.4 percent the previous week.
Meanwhile, interest rates on long-term mortgages are still in a historically-low range.
The average contract interest rate for 30-year fixed-rate mortgages increased to 4.69 percent, from 4.59 percent last week, the MBA said.  The average contract interest rate for 15-year fixed-rate mortgages increased to 4.12 percent from 4.05 percent.
On Monday, housing market observers desperate for some positive news got a glimmer of hope. The Commerce Department reported that newly built, single-family homes rose 23.6 percent to a seasonally adjusted annual rate of 330,000 units in June
However, analysts expressed caution against expectations of a turnaround. The June new home sales figure represented a 24 percent jump from a May – when new home sales are dismal following the April 30 expiration of homebuyer tax credits.
The National Association of Home Builders was nonetheless encouraged by the June sales figure.
“It’s worth noting that some of the new-home sales in June were due to move-up buyers who were able to sell their previous home to a tax-credit-eligible buyer while that program was active,” said NAHB Chief Economist David Crowe. “Also, while sales activity is still far from robust, it has picked up some momentum as positive factors such as historic low mortgage rates, great selection and attractive prices help draw potential home buyers back to the market.”

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