Mortgage applications in the U.S. declined last week for a third consecutive time, hurt by a drop in purchasing and refinancing.
The Mortgage Bankers Association’s index fell 1.4 percent in the week ended Sept. 17 to the lowest level in six weeks, the Washington-based group said today. Purchases decreased 3.3 percent and refinancing lost 0.9 percent.
An unemployment rate near a 26-year high and battered household finances will probably restrain housing, even as record-low mortgage costs and decreasing prices make buying more affordable. Federal Reserve policy makers yesterday again acknowledged that the economic recovery will be “modest,” in part because residential construction remains “depressed.”
“The housing recovery will remain very slow,” Chris Christopher, a senior economist at IHS Global Insight in Lexington, Massachusetts, said in a note before the report.
A report yesterday from the Commerce Department showed builders in August sought fewer permits to begin work on single-family homes for a fifth consecutive month. Overall, housing starts rose more than forecast, outstripping a gain in applications that signals construction will stay close to record lows.
The average rate on a 30-year fixed mortgage fell to 4.44 percent last week from 4.47 percent the prior week, today’s report from the bankers’ group showed. It reached 4.43 percent in the last week of August, the lowest in data going back to 1990.
At the current rate, monthly payments for each $100,000 of a loan would be about $503, or $32 less than a year ago when the rate was 4.97 percent.
The average rate on a 15-year fixed loan fell to 3.88 percent from 3.96 percent, and the rate on a one-year adjustable climbed to 6.96 percent from 6.89 percent.
The share of applicants seeking to refinance a loan rose to 81.3 percent from 80.5 percent the prior week.
Sales slumped after the deadline for signing contracts and becoming eligible for a government homebuyer credit worth as much as $8,000 lapsed on April 30. The tax incentive provided temporary relief for the industry that precipitated the recession.
The Fed’s policy-making Federal Open Market Committee yesterday said it’s willing to ease monetary policy further to reduce unemployment and prevent inflation from slowing further. Officials kept the benchmark interest rate in a range of zero to 0.25 percent, where it’s been since December 2008.