U.S. Mortgage Applications Fall on Less Refinancing
Mortgage applications in the U.S. fell for a second straight week, led by a decline in refinancing.
The Mortgage Bankers Association’s index of loan applications decreased 2 percent in the period ended April 1. The Washington group’s refinancing measure dropped 6.2 percent, while the purchase gauge rose 6.7 percent to the highest level this year.
Thirty-year fixed mortgage rates hovering near 5 percent are likely depressing refinancing, since most people able to get credit have already applied, the group said. The increase in purchases reflected a jump in demand for government loans as buyers tried to beat an April 18 increase in Federal Housing Administration insurance premiums, Michael Fratantoni, MBA’s vice president for research and economics, said in a statement.
“The pool of borrowers who have both the incentive and the ability to qualify for a refinance continues to shrink,” Fratantoni wrote. Overall, purchase volume “remains relatively low by historical standards,” he said.
The average rate on a 30-year fixed loan rose to 4.93 percent last week from 4.92 percent the prior week, the mortgage bankers group said. Borrowing costs have increased since reaching 4.21 percent in October, the lowest since the group’s records began in 1990.
The average rate on a 15-year fixed mortgage decreased to 4.14 percent from 4.16 percent.
The share of applicants seeking to refinance a loan declined to 61.2 percent from 64.3 percent.
The group’s purchase index in government-loan market jumped 10 percent, while its conventional-loan gauge rose 4 percent.
Home Sales Weak
Recent housing figures have shown the industry is struggling. Sales of existing homes decreased 9.6 percent to a 4.88 million rate in February. Distressed properties accounted for 39 percent of all sales, and 33 percent were cash transactions, the National Association of Realtors said March 21.
Purchases of new homes fell in February to the lowest level on record, the Commerce Department said on March 23. Builders started construction on 479,000 dwellings at an annual pace last month, almost matching the record-low 477,000 rate reached in April 2009, the Commerce Department said March 16.
KB Home (KBH), the Los Angeles-based homebuilder that targets first-time buyers, yesterday reported a wider first-quarter loss as revenue and new orders plunged amid slumping demand.
“There is still uncertainty as to when a sustained housing recovery may occur,” said Jeffrey Mezger, president and chief executive officer of KB Home. Still, “as this year’s spring selling season has commenced, we are encouraged by the higher traffic we experienced in the first quarter compared to a year ago,” he said.
To contact the reporter on this story: Bob Willis in Washington at email@example.com
To contact the editor responsible for this story: Christopher Wellisz at firstname.lastname@example.org