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Mortgage Applications Fall in First Drop Since July

Wednesday, 08 Sep 2010 07:25 AM

The number of mortgage applications in the U.S. declined for the first time in six weeks as fewer Americans refinanced.

The Mortgage Bankers Association’s index fell 1.5 percent in the week ended Sept. 3, the Washington-based group said. Refinancing declined by 3.1 percent, while applications for purchases rose 6.3 percent.

Mortgage rates increased from a record low, prompting the first decline in refinancing in six weeks. The third straight gain in purchases points to some stabilization in a housing market where a sustained recovery may take years to develop because of the lack of jobs and mounting home foreclosures.

“We still have core weakness in housing demand and I really don’t see enough momentum to shift that,” Derek Holt, an economist at Scotia Capital Inc. in Toronto, said before the report.

The average rate on a 30-year fixed mortgage increased to 4.50 percent from 4.43 percent the prior week, which was the lowest in data going back to 1990. At the current rate, monthly payments for each $100,000 of a loan would be about $507, or $32 less than a year ago when the rate was 5.03 percent.

The average rate on a 15-year fixed loan rose to 4 percent from 3.88 percent. The rate on a one-year adjustable increased to 7 percent from 6.95 percent.

The share of applications seeking to refinance a loan dropped to 81.9 percent from 82.9 percent, which was the highest since January 2009.

A report last week showed pending sales of existing homes unexpectedly rose in July, a sign that the housing market may be starting to stabilize after the expiration of the federal homebuyer tax credit. The index of pending home resales increased 5.2 percent, figures from the National Association of Realtors showed Sept. 2.

Unemployment close to 10 percent and a lack of faster job creation are making Americans more guarded about large purchases such as homes. The Labor Department said Sept. 3 that private companies added 67,000 jobs last month and the unemployment rate rose to 9.6 percent.

To help homeowners who’ve lost income avoid foreclosure, the Obama administration plans to offer $1 billion in zero- interest loans as part of $3 billion in additional aid targeting economically distressed areas.

Foreclosures and short-sales are another reason the housing market restrains the economy. Home seizures increased almost 4 percent in July from the previous month, with 325,229 properties getting a notice of default, auction or bank repossession, RealtyTrac Inc. said Aug. 12.

Toll Brothers Inc., the largest U.S. luxury homebuilder, reported its first quarterly profit since 2007 after a tax benefit and drop in write-downs. The acceleration in deposits and traffic through the first few weeks of May was not sustained the rest of the quarter that ended July 31, Horsham, Pa.-based Toll said.

Demand “has continued to be very bumpy and relatively slow,” Chief Executive Officer Douglas Yearley said on a conference call with analysts and investors on Aug. 25. “We don’t blame our buyers, they’re skittish.”

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The number of mortgage applications in the U.S. declined for the first time in six weeks as fewer Americans refinanced. The Mortgage Bankers Association s index fell 1.5 percent in the week ended Sept. 3, the Washington-based group said. Refinancing declined by 3.1...
Home,Buying,Up,Year
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2010-25-08
Wednesday, 08 Sep 2010 07:25 AM
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