U.S. mortgage applications fell last week, with demand for home
purchase loans dropping to a 12-year low even as interest rates on
30-year loans fell to their lowest level in six months, data from an
industry group showed on Wednesday.
Home purchase loan demand fell for a sixth
straight week, a trend that does not bode well for the U.S. housing
market, which has been showing signs of stabilization after a
three-year slump.
The
Mortgage Bankers Association said its seasonally adjusted index of
mortgage applications, which includes both purchase and refinance
loans, decreased 2.5 percent to 611.7 for the week ended Nov. 13.
The
hard-hit housing market, a primary driver of the worst U.S. recession
since the 1930s, remains highly vulnerable and many are hopeful that
the federal government's intervention will prevent any setbacks.
Ned Redpath, owner/president of Coldwell
Banker - Redpath & Co., Realtors in Hanover, New Hampshire, said
the recent extension and expansion of the home buyer tax credit is a
positive development, but believes it expires too early.
"The
cut-off happens too soon and really does not give enough time and space
to truly get the market moving, but at least it is something instead of
shutting it down now," he said.
The Obama administration recently extended an
$8,000 first-time buyer credit that had been due to expire at the end
of this month, added a $6,500 credit for home owners buying a new
residence, and increased income limits.
Eligible borrowers must sign contracts by April 30 and close loans by June 30.
"I
believe we will see an increase in normal sales due to the tax credit
and a few more first-time home buyers as well," Redpath said.
The
MBA said borrowing costs on 30-year fixed-rate mortgages, excluding
fees, averaged 4.83 percent, down 0.07 percentage point from the
previous week, the lowest since mid-May. The rate remained above the
all-time low of 4.61 percent set in the week ended March 27.
The survey has been conducted weekly since 1990.
Low interest rates, however, did not impact applications to buy homes, a tentative early indicator of sales.
The
MBA's seasonally adjusted purchase index fell 4.7 percent to 210.6, the
lowest since November 1997. The four-week moving average of mortgage
applications, which smoothes out the volatile weekly figures, was down
1.2 percent.
Refinancing Slumps
The low rates also failed to spark home loan refinancing activity.
The Mortgage Bankers seasonally adjusted index of refinancing applications decreased 1.4 percent to 2,955.4.
The 30-year fixed-rate mortgage is the most
widely used loan and the 5 percent rate level is something of a
psychological tipping point, typically sparking home loan refinancing
activity.
Fixed 15-year mortgage rates averaged 4.32 percent, down from 4.33 percent the previous week.
Rates on one-year ARMs decreased to 6.82 percent from 6.85 percent.
Source:
cnbc.com