Home Loan Application Volume Declines

May 23, 2005 LOS ANGELES -- Recent evaluation in the scope of mortgage home loan market-related swings by The Mortgage Banker's Association (MBA) reveals that overall, the number of mortgage applications fell in week ending May 13 by the largest percentage so far this year. Particularly peculiar is the MBA's measure of home purchase loan origination declination from a recent record amount. The reason this is odd is based upon the fact that home loan interest rates are at record-setting lows not seen since February.

The MBA's index of home loan applications dropped 10.5% to 699.2. When you compare this figure to 781.0 seen just one week earlier you'll see the oddities. When the sums are all in, the fact is that purchase money loan origination saw its biggest decline since the last week of December 2004. Here's a true anomaly: In the week prior to the above-referenced May 13, home purchase application volume had sky rocketed 9.4 percent to the highest level since April 9 of last year.

Still, the fact remains that home purchase applications are still quite close to an all-time high. Based on this information, economists predict that home sales this year will likely be the second-highest on record. This augmented by an improved, and continually improving, labor market as well as wage growth and borrowing costs remaining at historic low levels.

Home loan interest rates, as measured by the MBA on a consistent basis, have stayed within 1.5 percentage points of a four-decade low figure totaling 4.99 percent (June 2003).

Mortgage rates are expected to rise this year as the Federal Reserve measurably bumps short-term interest rates, as promised, to control inflation.

Article by Nolan Voight, Mortgage Columnist.

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