Home Purchase Loans Up, Mortgage Refinancing Down

Mortgage applications declined over the past week due to plummeting demand to refinance home loans, as long-term mortgage rates remain at their highest levels since October.

The Mortgage Bankers Association’s mortgage application index declined by 1.7 percent to a seasonally adjusted 625.3 in the week ending June 1.

A rise in home purchase loan applications, used to buy homes, was clearly overshadowed by the drop in mortgage refinance activity.

The MBA’s seasonally adjusted purchase index rose 1.5 percent to 433.6 - but mortgage refinancing fell 6.1 percent to 1,757.1 in the June 1 week.

The mortgage refinance measure has not been at lower levels since it registered 1,640.4 at the end of last year.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, rose 0.03 percent to an average of 6.35 percent, the peak since mortgage rates hit an average of 6.36 percent was reached in the week ending October 20.

In all, refinance activity represented 38 percent of total mortgage application movement, down from 39.7 percent the week before and the lowest since July.

On a four-week moving average, which smooths out some of the volatility of the weekly figures, all three of the MBA’s seasonally adjusted indexes have fallen.

The home mortgage loan applications index, also called the market index, is down by 2.1 percent; the purchase index is down 0.3 percent and mortgage refinance index is down 4.3 percent.

SOURCE: Reuters