Mortgage Applications Sink To 13 Year Low

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.