Mortgage Applications Fall as Refinancing Demand Slows

Wednesday, 31 Oct 2012 02:56 PM

 

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Applications for U.S. home mortgages fell last week as demand for refinancing tumbled for the fourth week in a row, an industry group said on Wednesday, although other recent data has indicated the housing market is improving.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, was down 4.8 percent in the week ended Oct 26.

The MBA's seasonally adjusted index of refinancing applications dropped 6 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, edged up 0.5 percent.

The U.S. Federal Reserve last month helped spur mortgage activity when it announced a third round of so-called quantitative easing to aid the economy, driving down home loan rates and making it more attractive for borrowers to refinance.

Mortgage activity has faded somewhat since that impetus, possibly highlighting a dwindling number of homeowners able to take advantage of lower rates due to weak credit scores, or not enough equity in their homes because of lower house prices.

But one analyst said the mortgage applications numbers can be volatile and he did not think the decline of the last 4 weeks indicated a deterioration in the broader outlook for housing, which has brightened in recent months.

"Overall, the housing data has been favorable," said Daniel Silver at JPMorgan in New York. "New home construction, new home sales — levels are still very weak, but you see growth rates picking up, and it is pretty clear that it is on an upward trend," he said.

The Mortgage Bankers Association said that the refinance share of total mortgage activity slipped to 80 percent of applications from 81 percent.

Fixed 30-year mortgage rates averaged 3.65 percent in the week, up 2 basis points from 3.63 percent the week before.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

© 2014 Thomson/Reuters. All rights reserved.

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