Purchase mortgage applications hit 19-year low

shutterstock_155808050-300x200Weakening housing activity image via Shutterstock

Purchase mortgage applications hit 19-year low

MBA: ‘We would expect a significant pickup in purchase activity, and we are not yet seeing it’

Teke Wiggin, Staff Writer

Feb 26, 2014

Applications for purchase mortgages hit a seasonally adjusted 19-year low last week, as demand from borrowers continued to lag despite the imminent onset of spring buying season, the Mortgage Bankers Association MBA reported.

Purchase loan applications fell a seasonally adjusted 4 percent for the week ending Feb. 21 to their lowest level since 1995, and were down 15 percent year over year, according to the latest Mortgage Bankers Association’s MBA Weekly Mortgage Applications survey.

“[T]his is the time of a year we would expect a significant pickup in purchase activity, and we are not yet seeing it,” said Mike Fratantoni, chief economist at MBA.

The survey’s results offer the latest indication that the housing recovery has lost some steam. Existing-home sales and pending home sales which predict future existing-home sales have both trended downwards in recent months.

Many real estate analysts say that increased mortgage rates and home prices are largely responsible. According to RealtyTrac, they’ve driven up the cost of owning a home by 21 percent in the last year.

In addition, housing experts cite unusually cold weather, tight credit potentially exacerbated by new mortgage rules and low inventory as headwinds.

But Jed Kolko, chief economist at Trulia, said there’s reason to believe that the demand from mortgage-financed buyers may recover soon.

“[R]ates remain low by historical standards, and the new mortgage rules could expand credit availability for loans that conform to the new standards, so part of the slowdown in purchase mortgage applications may be short-lived,” he said.

via Purchase mortgage applications hit 19-year low | Inman News.