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Mortgage application volume slumps
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July 27, 2005 WASHINGTON --
Scuttled by a steep decline in refinancing activity, applications for U.S. home mortgages faced a sharp decrease last week. This happened despite steady long-term interest rates. It seems the U.S. consumers lost their desire for home refinancing last week despite comparatively low interest rates.
In its release of Weekly Mortgage Applications Survey for the week ending July 8 the Mortgage Bankers Association said the Market Composite Index - a measure of mortgage loan application volume - was 791.9, a decrease of 7.2 percent on a seasonally adjusted basis from 853.4 from the earlier week.
Although the Index decreased 25.7 percent compared with the previous week, it was up 22 percent compared with the same week the previous year. The MBA stated that its seasonally adjusted index of mortgage application activity plunged 5.8 percent to 754.3 in the week ending July 22, overshadowing the previous week's 1.2 percent gain. Despite rising 2.5 percent the previous week, the MBA's seasonally adjusted index of refinancing applications fell 11.4 percent to 2,320.3 and to continue the downward trend, the four week moving average for the seasonally-adjusted Market Index is down 1.3 percent to 795.8 from 806.2
The purchase index, that is used to measure loan requests for home purchases, declined 0.7 percent to 485.1 that is unfortunately its third successive weekly drop. In the first week of July it dropped 6.1 percent and then it dropped 0.1 percent the following week, according to the MBA. Fixed 30-year mortgage rates remained unchanged from the previous week with an average of 5.72 percent, excluding fees. But then this was 1/4th of a percentage point more from the week ending June 24, a critical point when the 30-year rate hit its nadir in 2005. All the same, this mortgage rate that stood at 5.97 percent during the week ending July 23, 2004, has still to catch up with its 2005 peak of 6.08 percent that it touched at the end of March this year.
The 11.4 percent drop in the refinancing index last week witnessed its steepest
fall in six weeks. The index fell 13.2 percent in the week ending June 17,
2005. As if to follow suit, as a percentage of all mortgage applications,
refinancings also came down 42.9 percent last week from 45.7 percent the
previous week.
As a positive sign the industry analysts believe interest rates are still good
enough to attract consumers, referring to data that portrays a robust market
with little sign of easing. - By
Amrit Hallan for CMR Loan news.
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