Mortgage applications decline for third week
Mortgage applications in the U.S. fell for a third consecutive week as fewer Americans refinanced, while purchases stayed close to a 14-year low.
The Mortgage Bankers Association’s index decreased 4.9 percent in the period ended Sept. 2, the Washington-based group reported today. The refinancing gauge dropped 6.3 percent. A decrease in mortgage rates helped the group’s purchase index rise 0.2 percent, a second straight gain after reaching the lowest level since December 1996.
Plunging consumer confidence and a stagnant labor market may be keeping buyers on the sidelines, a reminder near-record low borrowing costs are doing little to spur housing. The prospect of more foreclosures working their way through the pipeline may keep prices at distressed levels, hampering the recovery.
“Potential homebuyers are reluctant to step up to the plate and buy homes despite record-low mortgage rates,” said Michael Larson, a housing analyst at Weiss Research in Jupiter, Florida. “I doubt even lower rates will make much of a difference unless the broader economy rebounds.”
The average rate on a 30-year fixed loan decreased to 4.23 percent, the second-lowest in records going back to 1990, from 4.32 percent the prior week. The record-low is 4.21 percent, reached in October. The average rate on a 15-year fixed mortgage dropped to 3.41 percent last week, the report showed.
U.S. mortgage rates, which track 10-year Treasures, have fallen amid growing concern Europe’s debt crisis is worsening and the U.S. economy may slide back into a recession. The yield on the 10-year Treasury note fell to a record low late yesterday.
Refinancing Share
The share of applicants seeking to refinance a loan decreased to 77.1 percent last week from 77.8 percent the prior week.
Home sales are in the doldrums. Purchases of previously owned houses, which account for the bulk of the market, fell in July to the weakest pace since November, while sales of new properties declined to the lowest level in five months, reports showed last month.
The S&P/Case-Shiller index of property values in 20 cities dropped 4.5 percent in June from a year earlier, the group said last month in New York. The index was down 32 percent from its July 2006 peak,
“The U.S. housing market remains under stress,” Frank Blake, chairman and chief executive officer at Home Depot Inc., said on an Aug. 16 teleconference with analysts. “We do not expect any meaningful improvement in the housing market for the back half of 2011, and events here and across the globe would suggest that there are more risks to the downside than the upside.”