Finance Globe
U.S. financial and economic topics from several finance writers.
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Mortgage Applications Drop for Second Week
Applications for mortgages in the week ending October 16 was sharply down again for the second week in a row, according to a report released today by the Mortgage Bankers Association (MBA).
The Market Composite Index, a measure of mortgage loan application volume, decreased 13.7% on a seasonally-adjusted basis from the previous week. This includes an adjustment for the Columbus Day holiday. Unadjusted, the index decreased by 22.4% from the previous week's reading.
The MBA said that the Refinance Index decreased 16.8% from the week prior, also adjusted for the holiday. The seasonally-adjusted Purchase Index decreased 7.6% from the previous week; unadjusted, the index fell 16.7% from the previous week's reading and was down 3.4% from the same week a year ago.
The average interest rate for conventional mortgages with an 80% loan-to-value ratio increased for last week, contributing to the decline in refinance applications. The average contract interest rate for new 30-year fixed rate mortgages increased to 5.07% from 5.02% in the week before, with points increasing to 1.13 from 1.11. The rate for 15-year mortgages increased to 4.51% from 4.44% in the previous week, with points decreasing to .96 from 1.04. And the rate for one-year adjustable rate mortgages increased to 6.86% from 6.71%, with points decreasing to .31 from .32. Points include the origination fee.
The steep drop in mortgage applications is likely due to uncertainty in whether Congress will extend the $8000 first-time home-buyer's credit beyond its current expiration date of November 30. The loan must close by the deadline to qualify for the credit, so with a typical closing taking thirty or more days from the signing of the contract, time is running out for those who haven't yet found the home they're ready to make an offer on.
Congress is considering a plan to extend the credit to June 10, 2010, and eliminating the requirement of being a first-time home buyer, currently defined as one who hasn't owned a home in the past three years.
Source:
Mortgage Bankers Association
The Market Composite Index, a measure of mortgage loan application volume, decreased 13.7% on a seasonally-adjusted basis from the previous week. This includes an adjustment for the Columbus Day holiday. Unadjusted, the index decreased by 22.4% from the previous week's reading.
The MBA said that the Refinance Index decreased 16.8% from the week prior, also adjusted for the holiday. The seasonally-adjusted Purchase Index decreased 7.6% from the previous week; unadjusted, the index fell 16.7% from the previous week's reading and was down 3.4% from the same week a year ago.
The average interest rate for conventional mortgages with an 80% loan-to-value ratio increased for last week, contributing to the decline in refinance applications. The average contract interest rate for new 30-year fixed rate mortgages increased to 5.07% from 5.02% in the week before, with points increasing to 1.13 from 1.11. The rate for 15-year mortgages increased to 4.51% from 4.44% in the previous week, with points decreasing to .96 from 1.04. And the rate for one-year adjustable rate mortgages increased to 6.86% from 6.71%, with points decreasing to .31 from .32. Points include the origination fee.
The steep drop in mortgage applications is likely due to uncertainty in whether Congress will extend the $8000 first-time home-buyer's credit beyond its current expiration date of November 30. The loan must close by the deadline to qualify for the credit, so with a typical closing taking thirty or more days from the signing of the contract, time is running out for those who haven't yet found the home they're ready to make an offer on.
Congress is considering a plan to extend the credit to June 10, 2010, and eliminating the requirement of being a first-time home buyer, currently defined as one who hasn't owned a home in the past three years.
Source:
Mortgage Bankers Association
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