An index of mortgage applications in the U.S. decreased last week as refinancing cooled after borrowing costs jumped from a record low.
The Mortgage Bankers Association’s index fell 4.4 percent in the week ended July 23, the Washington-based group said today. The refinancing measure dropped 5.9 percent from the prior week’s one-year high, while the purchase index rose 2 percent.
Demand for purchase financing has hovered near the 13-year low reached earlier this month, showing the lowest mortgage rates on record have yet to spur sales after the expiration of a government tax credit. It will take gains in employment and in consumer confidence to boost housing.
“The housing market is weak,” Paul Anastos, president of Mortgage Master Inc., a Walpole, Massachusetts-based lender, said in an interview before the report. “There’s good opportunity out there in the housing market, but because consumer confidence is fairly low, people aren’t really shopping. They’re worried about other things, like jobs.”
The average rate on a 30-year fixed loan increased to 4.69 percent from 4.59 percent the prior week, which was the lowest since data began in 1990.
At the current rate, monthly payments for each $100,000 of a loan would be about $518, down $41 from a year ago when the rate was 5.36 percent.
The share of applicants seeking to refinance a loan fell to 78 percent last week from 79.4 percent the prior week, which was the highest level since April 2009.
The average rate on a 15-year fixed mortgage rose to 4.12 percent from 4.05 percent, and the rate on a one-year adjustable mortgage decreased to 7.15 percent from 7.17 percent.
New-home sales climbed to a 330,000 annual pace in June, second only to the prior month’s pace as the lowest on record, according to Commerce Department figures released on July 26. Sales of new and existing homes have weakened since the expiration of a federal homebuyers tax credit of up to $8,000, which required contracts be signed by April 30.
NVR Inc., based in Reston, Virginia, said last week the original June 30 closing deadline to qualify for the tax incentive resulted in a “surge in settlement activity” in the second quarter, with closings jumping 63 percent from the same time a year earlier. New orders fell 6 percent during the period.