Connect with us

Hi, what are you looking for?

The American GeniusThe American Genius

Mortgage

Mortgage applications drop despite lowest interest rates since WWII ended

Low rates aren’t enough

According to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey, mortgage applications dropped 4.3 percent from the week prior and is 12.1 percent lower than the same week in 2010. Last week, the conventional 30-year fixed rate mortgage averaged 4.01 percent, down nearly an entire percent from the week prior, but buyers weren’t swayed by the low rates, continuing to be discouraged by the overall economy and fear of qualification as well as job stability.

“Interest rates continued to fall last week, driven by the latest Federal Reserve actions to invest in longer-term Treasury and mortgage securities, but potential borrowers largely remained on the sidelines, seemingly unimpressed by the lowest (by any measure) mortgage rates since the 1940s,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “Refinance application volume declined and purchase volume was little changed. Purchase borrowers continue to value the government lending programs that permit lower downpayments. The government share of purchase applications decreased slightly to 41.6 percent last week, and while this is down from a recent peak of 50.4 percent in April 2010, it is still well above the pre-2009 survey average of 23.6 percent. Many refinance borrowers are opting to deleverage by moving to a 15-year term, with this product accounting for 27.0 percent of refinance volume last week.”

Refinance loans accounted to 79.1 of all mortgage application volume, down 0.6 percent from the week prior and in August, half of all refinance borrowers applied for 30 year fixed rate mortgages and the volume of 15 year refinance loans is at its highest point for the year. Home purchase applications were almost all 30 year fixed rate mortgages, at 90.1 percent, marking the lowest level of adjustable rate mortgages applied for this year.

With unemployment and underemployment continuing to plague the economy, potential borrowers are pensive regardless of attractively low loan rates and near WWII levels. Mortgage application volume is often used as a forward looking economic indicator of future sales contracts and ultimately of future closed transactions, with this overall dropping volume causing some to question whether or not real estate has hit the bottom yet.

Advertisement. Scroll to continue reading.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

16 Comments

Leave a Reply

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

Advertisement

The
American Genius
news neatly in your inbox

Subscribe to our mailing list for news sent straight to your email inbox.

Advertisement

KEEP READING!

Housing News

After the housing market completely crashed, many of us remain braced for the next shoe to fall, but should we be freaked out or...

Housing News

(Housing News) According to the National Association of Realtors, pending home sales have improved, calling the gain inevitable.

Housing News

CFPB was created by the Obama administration in 2011 to protect consumers, and immediately sought out ways to "bubble-proof" America, starting with mortgage disclosure...

Housing News

Accounting for the Veteran's Day holiday, mortgage applications actually fell for the week, but there is a silver lining when it comes to purchase...

The American Genius is a strong news voice in the entrepreneur and tech world, offering meaningful, concise insight into emerging technologies, the digital economy, best practices, and a shifting business culture. We refuse to publish fluff, and our readers rely on us for inspiring action. Copyright © 2005-2022, The American Genius, LLC.