Loan Apps Drop Again, Despite Low Rates

Mortgage rates last week plunged to their lowest level since May 2013, but the low rates didn’t seem to bring any extra home buyers to the table. Mortgage applications dipped 3.3 percent on a seasonally adjusted basis last week compared to the previous week, the Mortgage Bankers Association reports in its weekly mortgage market survey.

Broken out, applications for home refinancings remained flat while applications for home purchases, viewed as a leading gauge of future homebuying activity, dropped 7 percent. Mortgage applications for home purchases are 5 percent lower than they were a year ago, the MBA reports. 

The average 30-year fixed-rate mortgage contract rate fell to 4.06 percent last week, the lowest level since May 2013, the MBA reports. Rates were continuing to drop Tuesday too, the MBA notes.

“What is concerning in this report is that more home buyers are not taking advantage of these lower rates,” CNBC reports. “It points to the fact that it is not the rate driving the housing market today, but the availability of credit and the financial wherewithal of buyers to afford both the down payment and the sticker price of today's properties.”

Source: “Weekly Mortgage Applications Fall Despite Low Rates,” CNBC (Dec. 17, 2014)