PrintLess people are applying for mortgage loans to either purchase a home or to refinance their existing mortgage loan according to a survey of mortgage lenders released this morning.
A weekly survey conducted by the Mortgage Bankers Association reported that in the week ending September 25, mortgage applications to refinance fell 0.8 percent from a week ago, while mortgage applications to purchase homes dropped 6.2 percent from the prior week.
The weekly survey was disappointing news for the housing markets given that mortgage rates fell during the week. The survey reported that 30-year mortgage rates finished the week at 4.94 percent compared to a 4.97 percent rate a week earlier. Similarly, the one-year adjustable mortgage finished the week at 6.4 percent compared to a 6.52 percent rate a week ago.
The survey also reported that refinance applications comprised 65.3 percent of all mortgage applications, while purchase applications accounted for 34.7 percent. Adjustable rate mortgage applications accounted for 6.2 percent of all applications, while fixed-rate mortgage applications accounted for 93.8 percent.
Purchase application volume had been trending slightly upward since the beginning of the year until today’s release. Purchase application activity is now at the lowest level since the week of August 7. Historically, mortgage applications have been a reliable indicator of future home sales activity.
Most other recent housing news have supported the notion that the nation’s housing sector is stabilizing and on the road to recovery. The Commerce Department reported that new home sales rose in August to the highest level in almost a year. Yesterday we learned that home prices rose in July at the highest pace in almost four years. The S&P Case-Shiller 20-city home price index increased 1.2 percent from a month earlier. Compared to a year ago, the index fell 13.3 percent, a smaller decline than the 15.4 percent year over year decline posted in the previous month.
There are concerns that the housing recovery could falter in the coming year. The $8,000 home purchase tax credit is due to expire at the end of November. Most industry analysts are worried that if the credit is lifted, first-time home buying activity will slow. In addition, foreclosure filings are expected to rise over the next two years due to planned rate resets on option ARM and interest only mortgage loans over the next several years. More foreclosures could slow the housing recovery and exert downward pressure on home values. And continued job losses remain a serious threat to the housing recovery. Although the labor market has recently shown signs of rebounding, the economy continues to shed jobs every month, discouraging households from purchasing homes.
Leave a Reply