Home purchase applications for new mortgages rose slightly, while refinancing shrank for the third straight week, indicating that after months of homeowners refinancing mortgages to lower less expensive loans the surge in refinances may finally be coming to an end, according to the Mortgage Bankers Association. Refinances slipped 6.4% for the week ending Oct. 29th from a week earlier.
The decline in refinancing came as rates on 30-year fixed rate mortgages rose modestly for the week to 4.28% on an average locked in 80% loan to value mortgage from 4.25% the previous week. The rate on a seldom used 15-year fixed rate loan also rose by a similar margin to 3.67%.
Refinances still, however, make up the majority of lending business, composing 81.3% of all applications, according to the weekly survey taken by the bankers association. The survey represents about half of all U.S. mortgage business.
The seasonally adjusted purchase index increased a slight 1.4% from a week earlier. Unadjusted purchases actually rose for the week 0.2% compared with the past week and were 28% lower than a year ago when the federal home buyer tax credit was driving home buyers to make purchases. Once the credit expired purchases declined for up to three straight months, but have since rebounded, according to industry data.
The highest unemployment in decades is making it difficult for the housing market to fully rebound since fewer people can qualify for financing even as rates for mortgages remain near record lows.
Rates on an adjustable rate mortgages decreased to an average of 3.64% for the week from 3.67% with points increasing to 1.08 on an 80% loan to value mortgage.