Mortgage Demand Falls as Rates Spike, Refis Drop

Wednesday, 07 Apr 2010 08:59 AM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
U.S. mortgage rates spiked last week, slashing refinancing demand, while requests for home purchase loans slid 11 percent amid a final rush for federal tax credits, Mortgage Bankers Association data showed on Wednesday.

Time is running out for home buyers seeking tax credits of up to $8,000, with purchase contracts needing to be signed by the end of this month and loans closed by the end of June.

With just a month to cash in on the tax incentive, which is designed to infuse life into a fragile housing market, demand for mortgages to buy homes eked out a 0.2 percent seasonally adjusted rise in the week ended April 2, the trade group said.

But applications for refinancing slumped 16.9 percent, pushing the trade group's mortgage market index of total applications down 11 percent.

The average 30-year mortgage rate shot up by more than a quarter percentage point to 5.31 percent, a nearly eight-month high and well above the 4.61 percent record low a year ago.

Refinancing represented 58.7 percent of all applications last week, down from 63.2 percent the prior week. It was the lowest share since last August.

"Mortgage rates jumped last week as the Federal Reserve completed their purchases of mortgage-backed securities," Michael Fratantoni, MBA's vice president of research and economics, said in a statement.

U.S. home loan rates have likely seen their cyclical lows and are headed up now that the Federal Reserve has ended purchases of more than $1.4 trillion in mortgage-related debt aimed at lowering borrowing costs to revive housing.

The share of mortgages issued by government agencies accelerated during the deepest housing crash since the Great Depression, as bank lending became exceedingly restrictive, and has stayed strong as housing has begun to stabilize.

The MBA's government purchase index last week rose for the third straight week, and now nearly half of all applications to buy homes are for government loans — the highest share since February 1990.

The nearly simultaneous end of two major government housing supports — the tax credits and mortgage bond purchases — could result in an initial push to buy early in the spring selling season.

But with unemployment still hovering just under 10 percent and a steady stream of foreclosed properties still to hit the market, housing will bump along the bottom for at least a year, most housing experts expect.

Purchase applications likely will rise in April also from buyers stymied by unusually harsh winter weather.

"April is going to surprise to the upside," said Steve Blitz, senior economist at Majestic Research. "When you take the combination of the end of the tax program and the extent to which bad weather suppressed sales, if there is pent-up demand you're going to see it in April," he said.

© 2014 Thomson/Reuters. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Advocates Seek to End Tennessee's Appeal as 'Abortion Destination'

Saturday, 25 Oct 2014 11:20 AM

Anti-abortion advocates are trying to change laws in Tennessee, which they deride as being the abortion destination of . . .

Texas Candidate in GOP Address: Time To Clean Up Washington

Saturday, 25 Oct 2014 09:37 AM

The United States needs new energy to stay strong, and the government needs to clean up the mess of debt and waste mov . . .

Putin Accuses US of Blackmail, Warns World Order May Collapse

Saturday, 25 Oct 2014 09:04 AM

Vladimir Putin accused the U.S. of behaving like Big Brother and blackmailing world leaders, warning there was no guar . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved