Mortgage Applications Dropped Last Week

After climbing for three straight weeks in a row, US home loan purchase applications dropped 2.8% in the week ending September 21st according to the Mortgage Bankers Association. While purchases did drop refinance applications increased 3.3 percent, which is the highest since mid May. This weaker demand for purchases is consistent with the industry and government reports finding the amount of sales and the prices dropping to multi year lows. Refinancing represented 46.4 percent of all applications, which is up from 43.5 percent the prior week. The share of adjustable rate mortgage loan applications fell to 12.2 percent from 12.6 percent.

According to the National Association of Realtor, sales of existing homes sank in August to a five-year low and realtor inventory rose to a 18-year high. Some of this is due to the more restrictive lending that has been making it harder for borrowers to get mortgage applications approved. The National Association of Realtors stated that in many markets as many as one in ten home sales fails to close because borrowers have been unable to get financing. Some markets are experiencing this fallout rate as high as 30 percent.