Today the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications survey for last week came out. Total Mortgage activity increased 6.7 percent from the previous week. Refinance activity is up 9.2 percent from the week before, while purchase activity decreased again, this week by 2 percent.
Refinance activity has been up sharply for the last couple of weeks, due largely to all-time low mortgage rates. Conversely, purchase activity has collapsed since the expiration of the first time home buyer tax credit, decreasing in eight of the last nine surveys. Purchase activity is down almost 35 percent from the previous year. Refinances account for nearly 80 percent of total mortgage activity.
Michael Fratantoni of the MBA said: “mortgage rates remained near record lows last week, as incoming data on the job and housing markets were weaker than anticipated. As more homeowners locked in to these low rates, the level of refinance applications increased to a new 13-month high. For the month of June, purchase applications declined almost 15 percent relative to the prior month, and were down more than 30 percent compared to April, the last month in which buyers were eligible for the tax credit.”
The continuing decline in purchase activity is definitely concerning. Low mortgage rates alone are not enticing many people to purchase homes. Continuing high unemployment and an economy that appears to be decelerating are making potential home buyers gun-shy. Recovery in the housing market is going to be crucial to a more widespread economic recovery, and the current economic numbers are not especially encouraging.
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