According to the weekly Mortgage Bankers Association survey, mortgage application volume dipped 2.7 percent for the week ending September 28, with the index falling to 636.7 from 654.2 the previous week.
To give you some perspective, the all time high for the mortgage application index was 1,856.7 during the week ended May 30, 2003.
“Housing has clearly entered a second downward spiral, with sales likely to fall significantly further in coming months,” John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina, said before the release of the report.
Refinance volume fell 3.8 percent, while purchase volume slipped 1.8 percent to its lowest level since the week ended April 20.
The percent of loan applications that were refinances dropped slightly from 46.4 percent to 46 percent.
Refinancing will continue to be difficult as homeowners find themselves trapped in their current mortgages, thanks in part to dwindling home prices and tougher underwriting standards.
The average rate on a 30-year fixed rate mortgage dropped from 6.38 percent to 6.32 percent, while the rate on a one-year adjustable mortgage rose from 6.09 percent to 6.21 percent.
Interestingly, the group’s fixed-rate mortgage index fell 4.4 percent and the adjustable-rate mortgage index increased 9.7 percent.
Keep in mind that the survey only covers 50 percent of all residential retail mortgage originations each week, leaving out wholesale production and a number of other lenders.
And note that the numbers will likely be inflated as wholesale lenders continue to shut down shop, causing borrowers to push up retail numbers.
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