MBA: Lack of Urgency in Homebuying Affecting Applications

Weak housing demand is contributing to a decline in new mortgage applications, the Mortgage Bankers Association's Weekly Mortgage Applications Survey found. MBA's Market Composite Index for the week of Feb. 19, a measure of mortgage loan application volume, decreased 8.5% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index decreased 7.3% compared with the previous week. The seasonally adjusted Purchase Index decreased 7.3% from one week earlier, putting the index at its lowest level since May 1997. "As many East Coast markets were digging out from the blizzard last week, purchase applications fell, another indication that housing demand remains relatively weak," said Michael Fratantoni, MBA's vice president of research and economics. "With home prices continuing to drift amid an abundant inventory of homes on the market, potential homebuyers do not see any urgency to lock in purchases." Meanwhile, the Refinance Index decreased 8.9% from the previous week. The market share of refi applications was 68.1% of total applications, down from 69.3% the previous week. The market share of applications for adjustable-rate mortgages increased to 4.7%. The average contract interest rate for 30-year fixed-rate mortgages has zoomed back above the 5% line to 5.03% from the previous week's 4.94%, with points rising to 1.34 from 1.09 (including the origination fee) for loans with an 80% percent loan-to-value ratio, the association reported. The average contract interest rate for 15-year FRMs increased two basis points to 4.35%. The average contract interest rate for one-year ARMs increased 13 basis points to 6.80% from 6.67%. The MBA can be found online at http://www.mortgagebankers.org.