Home Mortgage Applications Decline Across U.S.
U.S. mortgage applications fell last week from the highest level since January as home purchases declined and fewer homeowners refinanced.
According to Bloomberg Media, the Mortgage Bankers Association’s index of applications to buy a house or refinance a mortgage declined by 3.7 percent to 623.6 in the week ending November 17, down from 647.5 the previous week. The group’s gauge of activity among people looking to refinance home loans dropped 4.3 percent and the index of regular home purchases fell 2.8 percent.
A conventional 30-year, fixed-rate mortgage is no even cheaper a year ago and builder incentives are helping keep the housing slump from turning into a rout. A rebound in the housing market may be several months away as Americans remain tentative and await even lower home prices and borrowing costs.
“Consumers are behaving quite rationally and probing the margins of the market to find out where the deals are,” said Joseph Brusuelas, chief U.S. economist at IDEAglobal in New York. “We’re a little ways off from recovery. Consumers, developers and homeowners are trying to adjust expectations.”
The average rate on a 30-year fixed mortgage fell to just 6.13 percent last week, the lowest since January, from 6.15 percent the prior week, the MBAA report showed. The mortgage rates have fallen from this year’s high of 6.86 percent in June.
At the current 30-year rate, borrowing costs for each $100,000 of a loan would be about $608 a month. A year ago, when the rate was 6.26 percent, the payment was $616.
Lower rates are prompting some consumers to switch to fixed-rate mortgages. The mortgage bankers group’s index of mortgage refinancing fell to 1935.3 last week from the prior week’s 2022.2.
Applications for adjustable-rate mortgages held at 25.5 percent of total home loan demand last week, matching the lowest since October 2003. The one-year ARM increased to 5.88 percent from 5.87 percent.
The group’s index of purchases dropped to 401.4 last week from 412.9, and is down 15 percent from a year earlier. Home building subtracted 1.12 percentage points, the most in a quarter century, from third-quarter GDP. Economists forecast housing to restrain the economy this quarter after the slowest pace of growth since 2003.
Some reports suggest that the housing market may be starting to stabilize. The National Association of Home Builders index of builder confidence rose to 33 from 31 in October, the first back-to-back gain since June 2005, the Washington-based group reported Nov. 16.
Home prices fell in about a third of U.S. metropolitan areas in the third quarter as the housing slowdown and job losses in the automobile industry forced sellers to accept lower bids for their properties, the National Association of Realtors said November 20.
The Realtors predict that new-home sales will drop 17 percent this year, while those of previously owned homes will fall 8.6 percent. Fewer homes are being built as demand remains weak. U.S. housing starts tumbled in October to the lowest level in more than six years, and building permits had the ninth straight monthly decline, the Commerce Department said.