Dennis Norman
Mortgage Applications Indicate Home Sales Are Slowing
The Mortgage Bankers Association (MBA) released its weekly mortgage applications survey for the week ending May 21,2010. The report showed the MBA Purchase Index (a measure of the volume of loan applications related to a home purchase),after decreasing a total of 36.6 percent during the prior two weeks,decreased another 3.3 percent for the week. This marks the lowest level the MBA purchase index has reached since April 1997.
The four-week moving average of home purchase mortgage applications is down 7.2 percent.
Existing Home-owners Appear to Be Digging Their Heels In and Staying Put…
Mortgage Refinancing index shot up another 17.0 percent this week after increasing in each of the prior two weeks over 14.5 percent per week. The refinance share of mortgage applications jumped significantly to 72.2 percent this week from 68.1 percent last week,which is the highest refinance share of the market since December 2009. I think this is clearly an indication that a lot of existing homeowners have no plans to buy a replacement home anytime in the near future…if they did they probably could not justify the expense and hassle of doing a refinance.
“Refinance application volume jumped last week as continuing financial market turmoil related to the budget crises in Europe extended the opportunity for homeowners to lock in at historically low mortgage rates,”said Michael Fratantoni,MBA’s Vice President of Research and Economics. “In contrast,purchase applications fell further this week,following last week’s sharp decline,keeping the purchase index at 13-year lows.”
Interest rates and fees for the week:
- 30 year fixed-rate mortgage interest rates decreased to 4.80 percent from 4.83 percent,with fees remaining constant at 1.08 percent on loans that are 80 percent of the value of the home.
- 15 year fixed rate mortgage interest rates increased to 4.25 percent from 4.19 percent,with fees decreasing to 1.0 percent from 1.36 percent on loans that are 80 percent of the value of the home.
- One-year ARM interest rates increased to 6.83 percent from 6.81 percent,with fees increasing to 0.38 percent from 0.37 percent for loans that are 80 percent of the value of the home.
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