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Mortgage application volume slides even more, time to panic yet?

Seattle homes for sale, photo by AR McLin.

Mortgage applications are down

For the fourth week in a row, the Mortgage Bankers Association is reporting that their seasonally adjusted index of mortgage application activity has dropped. Is it time for Realtors to panic that the horrible economy is becoming even more horrible? No.

Mortgage application activity fell 5.1% in the week ending July 8 over the prior week and had been falling for three weeks prior to that. Interest rates are down, causing some to ask what the drop in mortgage applications are and if it is a future indicator that sales will soon dip as well?

Because the index includes both home purchase applications and refinancing, it should be noted that refinancing applications dipped 6.2% during the week while home mortgage purchase applications only dropped 2.6%. Over the year, refinance applications took a 42.1% nosedive.

Current stats:

The MBA noted that “the four week moving average for the seasonally adjusted Market Index is down 4.7 percent. The four week moving average is down 1.0 percent for the seasonally adjusted Purchase Index, while this average is down 6.3 percent for the Refinance Index.”

“The refinance share of mortgage activity decreased to 65.6 percent of total applications from 66.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.5 percent from 6.1 percent of total applications from the previous week.”

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“The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.55 percent from 4.69 percent, with points increasing to 0.99 from 0.90 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also decreased from last week.”

“The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.68 percent from 3.79 percent, with points increasing to 1.10 from 0.88 (including the origination fee) for 80 percent LTV loans. The effective rate also decreased from last week.”

Panic or don’t panic?

The bottom line is that Realtors need not panic, it’s mainly refinances that have declined and sales should stay on their current target- low but steady.

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The American Genius is news, insights, tools, and inspiration for business owners and professionals. AG condenses information on technology, business, social media, startups, economics and more, so you don’t have to.



  1. eric

    July 14, 2011 at 5:07 am

    I don't think there is a particular time to panic. You can panic at good or bad times. it doesn't change the economic facts… much. 🙂
    the lower application volume does signal that the economy is no way near on the recovering stage. However, there are many opportunities lay in difficult times. so it depends on who you ask. 🙂

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