Purchase Applications Hit 13-Year Low

Loan applications to buy new or existing homes plummeted 27% last week, reaching a 13-year low, according to new figures released by the Mortgage Bankers Association. The trade group noted that purchase applications have declined almost 20% over the past month despite interest rates on fixed-rate loans averaging less than 5%. The trade group tracks applications using an index it created back in 1990. In a statement MBA vice president of research and economics Michael Fratanoni said the results indicate that the expiring $8,000 federal tax credit "pulled sales into April at the expense of the remainder of the spring homebuying season." Although purchase apps were pummeled for the week ending May 14, the index that tracks refinance applications increased 14.5% from the previous week. Housing and mortgage economists believe total loan production will range from a low of $1 trillion to a high of $1.4 trillion this year. MBA's forecast is at the lower end of those estimates. Over the past two quarters refis have accounted for about 60% of all originations.