Mortgage Applications Sink To 13 Year Low

Tyler Durden's picture

The attempt to reflate housing seems to be officially dead. The Mortgage Brokers' Association reported that demand for loans to purchase
U.S. homes sunk to a 13-year low last week, and refinancing
demand also slid despite near record-low mortgage rates. As Reuters noted,
"requests for loans to buy homes dropped 3.1
percent in the
week ended July 9, after adjusting for the Independence Day
holiday, to the lowest level since December 1996, the industry
group said....
Rock-bottom borrowing costs are helping borrowers
with
pristine credit to buy and those who still have equity in their
homes to refinance.
" Also, from the MBA release, "the average contract interest
rate for 30-year fixed-rate
mortgages increased to 4.69 percent from 4.68 percent, with points
increasing to 0.96 from 0.86 (including the origination fee)
for 80 percent loan-to-value (LTV) ratio loans.  The effective
rate increased from last week." If even at sub-5% rates potential homeowners are not interested, it will take a whole lot of Intel CPU purchases to reverse the double dip in the economy as consumers refuse to purchase that primary bank balance sheet "asset."

Full release:

The Mortgage Bankers
Association (MBA) today released its Weekly Mortgage Applications Survey
for the week ending July
9, 2010.  The Market Composite Index, a measure of mortgage loan
application volume, decreased 2.9 percent on a seasonally
adjusted basis from one week earlier. This week’s results include
an adjustment to account for the Independence Day holiday. 
On an unadjusted basis, the Index decreased 12.6 percent compared
with the previous week.

The Refinance Index decreased 2.9 percent from the previous
week and the seasonally adjusted Purchase Index decreased 3.1
percent from one week earlier. This was the lowest Purchase
Index observed in the survey since December 1996.  The unadjusted
Purchase Index decreased 12.7 percent compared with the
previous week and was 43.0 percent lower than Independence Day week
one year ago.
 
The four week moving average for the
seasonally adjusted Market Index is up 1.5 percent.  The four week
moving average is
down 2.4 percent for the seasonally adjusted Purchase Index,
while this average is up 2.6 percent for the Refinance Index.

The refinance share of mortgage activity remained constant at
78.7 percent of total applications from the previous week. The
adjustable-rate mortgage (ARM) share of activity increased to
5.5 percent from 5.4 percent of total applications from the
previous week.

The average contract interest rate for 30-year fixed-rate
mortgages increased to 4.69 percent from 4.68 percent, with points
increasing to 0.96 from 0.86 (including the origination fee)
for 80 percent loan-to-value (LTV) ratio loans.  The effective
rate increased from last week.

The average contract interest rate for 15-year fixed-rate
mortgages increased to 4.12 percent from 4.11 percent, with points
increasing to 1.04 from 0.93 (including the origination fee)
for 80 percent LTV loans. The effective rate increased from last
week.

The average contract interest rate for one-year ARMs remained
unchanged at 7.20 percent, with points decreasing to 0.22 from
0.24 (including the origination fee) for 80 percent LTV loans.