Mortgage Activity in a Slump; Purchase Applications at 29-Month Low

Mortgage Activity in a Slump; Purchase Applications at 29-Month LowMortgage applications decreased 4.1 percent last week from one week earlier, continuing a prolonged slump which is worrisome for the housing market recovery.
The Mortgage Bankers Association’s index that measures mortgage applications for both purchases and refinancing indicates a slowdown that is somewhat perplexing, considering that average interest rates for the 30-year fixed have mostly stayed under 4.5 percent in recent weeks.
However, stricter mortgage rules that took effect this year may be having a stifling effect. A primary intent of the rules is to make lender’s accountable for making sure that borrowers can afford to pay their home loans.
The MBA’s refinance component index decreased 3 percent from the previous week.
The seasonally-adjusted component that measures only applications for home purchases decreased 6 percent from one week earlier — and is at its lowest level since September of 2011.
The refinance share of mortgage activity decreased to 61 percent of total applications, from 62 percent the previous week. It is at its lowest level since September of 2013.
The adjustable-rate mortgage (ARM) share of activity fared better, increasing to 8 percent of total applications.
The average contract interest rate for 30-year fixed-rate mortgages, with conforming loan balances ($417,000 or less), increased to 4.50 percent from 4.45 percent, for 80 percent loan-to-value ratio (LTV) loans.
The average contract interest rate for 30-year fixed-rate mortgages, with jumbo loan balances (greater than $417,000), increased to 4.45 percent from 4.40 percent, for 80 percent LTV loans.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.16 percent from 4.13 percent, for 80 percent LTV loans.

Leave a Reply

Your email address will not be published. Required fields are marked *