| NEW YORK, June 30
NEW YORK, June 30 Refinancing drove total U.S.
mortgage applications to an eight-month peak, as loan rates
fell to or near record lows, but demand to buy homes sank
toward 13-year lows last week, the Mortgage Bankers Association
said on Wednesday.
The U.S. housing market continued to deflate after a spring
sales spree, fueled by now-expired federal tax credits of up to
$8,000, robbed from summer home buying.
The upside is now limited by unemployment stuck near 10
percent, heavy foreclosure supply and pent-up selling from
owners just waiting for the right time to put their homes back
on the market.
Mortgage refinancing requests jumped 12.6 percent in the
week ended June 25 to the highest level since May 2009, as
average 30-year mortgage rates slid 0.08 percentage point to
4.67 percent, the industry group said.
The 30-year loan rate flirted with the record low of 4.61
percent set in March 2009, according to the MBA's records
dating back to 1990, while the 4.06 percent 15-year rate was an
Refinancing drove total mortgage applications up by 8.8
percent, seasonally adjusted, last week. Nearly 77 percent of
all loan requests were for a refinancing, the highest share
since April 2009.
Still, refi applications were about half the level seen in
the spring of 2009 and purchase demand fell for the seventh
week out of eight weeks since the tax credit ended, said
Michael Fratantoni, MBA's vice president of research and
Many qualified borrowers who could refinance have already
taken advantage of low rates when they previously touched
current levels. Others are not eligible, either because of
credit scores or home values that are well below their current
Despite low borrowing costs and home prices average about
30 percent less than their peaks four years ago, applications
to buy homes dropped 3.3 percent to hover just above 13-year
lows. Read more at [ID:nN29141057].
See related graphic: link.reuters.com/ruh84m
Buyers had to sign contracts by April 30 to get the $8,000
first-time purchase credit or $6,500 move-up credit.
Sales of new homes plunged nearly 33 percent in May,
however, to the lowest since record keeping began in the early
1960s and existing home sales unexpectedly fell 2.2 percent. A
double-dip recession is a growing concern.
"We're not out of the woods yet," said James Angel,
associate finance professor at Georgetown University's
McDonough School of Business in Washington. "Rescue scheme
after rescue scheme after rescue scheme has been tried, but we
still have millions of homeowners facing foreclosure."
Home prices rose in April, but heavy unsold inventory of
houses and foreclosure activity will impede a sustained
recovery, Standard & Poor's said on Tuesday. [ID:nNLL9HE665]
"Prices will stay more or less stagnant as excess inventory
is worked off for several years," said Angel.