Mortgage application volume fell 24.5 percent on a seasonally adjusted basis for the week ending February 6, the MBA reported today.
On an unadjusted basis, the index was off 23.5 percent from a week earlier and 43.9 percent compared with the same week a year earlier.
The home loan application index for purchases now sits at an eight-year low, thanks in part to stubborn borrowers waiting for a better deal.
Sure, interest rates are sitting at historically low levels, but with word the government may subsidize rates and offer a larger tax credit, why buy now? Then there’s the matter of falling home prices.
Last week’s decline was led by a 30.3 percent drop in refinance applications, an 11.1 percent slide in FHA and VA lending, and a 9.8 percent decrease in purchase apps.
That pushed the refinance share of mortgage activity to 66.7 percent of total applications, down from 73.2 percent a week earlier.
That, despite the fact that interest rates fell; the 30-year fixed slipped to 5.19 percent from 5.28 percent, while the 15-year averaged 5.00 percent, down from 5.15 percent a week prior.
The average contract rate for one-year ARMs increased to 6.22 percent from 6.09 percent, keeping demand for such loans low.
The MBA’s weekly survey covers roughly half of all retail residential loan applications, though it doesn’t take into account multiple or declined apps.
All of this yo-yoing can’t be good for lenders, as they try to set suitable staff levels and efficiently price mortgages.
As I mentioned a week ago, Wells Fargo was so inundated with applications that it didn’t lower interest rates as much as it would like because it wouldn’t be able to handle resulting volumes.
Factor in all those borrowers applying, then shopping around or holding out for better rates (or failing to qualify), and it’s far from a boon for banks and lenders.
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