Mortgage Applications Fell, Repo Homes Rose
The number of mortgage applications declined last week, as mortgage rates and inventories of repo homes increased, based on data released by the Mortgage Bankers Association on Wednesday.
Mortgage refinancing, which accounted for most of mortgage applications since January this year, has also slowed down despite relatively low mortgage rate levels.
The average rate for a 30-year mortgage increased to 4.81 percent, a 0.12 point increase from the record low 4.61 percent level in March.
MBA analysts said many homeowners who are determined to save their houses from becoming repossessed homes are waiting for the federal government to iron out kinks in its loan refinancing programs handled by Freddie Mac and Fannie Mae.
Homeowners have faced various hurdles while applying for mortgage refinancing with Fannie and Freddie to be able to save their homes from becoming repossessed homes. They are hoping to reduce their monthly payments so they can afford to pay their other bills. Economists meanwhile hope that these savings from refinancing would spur spending and help contribute to economic recovery.
Mortgage applications nationwide declined by 14.2 percent to 786 during the week of May 18 to 22 on an adjusted basis, a drop of 37 percent from its peak 1,250.6 level in April.
Brad Sherman, residential loan vice president for Nationwide Mortgage Services in Maryland, said many homeowners and prospective home buyers are holding out for further declines in prices and in rates.
He said many people are calling the company for mortgage information but are not following up on their inquiries because they see that home prices are still falling, especially prices of foreclosed homes.
Some prospective homebuyers are also nervous about the unemployment situation.
The MBA index for home loan applications increased by one percent to 256.6 during the week of May 18-22, but has not shown significant numbers towards an increase during the spring home selling season.
Applications for loan refinancing declined by nearly 19 percent to 3,890.4, a drop of about 43 percent from the peak 6,813.5 level in April. Loan refinancings accounted for around 69 percent of total number of mortgage applications, after getting near the 75 percent level in recent weeks.
Affordability levels are at record levels, but there are other significant factors affecting home purchases.
Pete Flint, CEO of San Francisco real estate service Trulia, explained that increased traffic to his web site indicates huge demand from first-time homebuyers, especially for repo homes. He nevertheless said that housing market recovery will only start until the foreclosure and unemployment problems are solved.
