By Kevin Chiu
Led by a slowdown in mortgage refinancing activity, mortgage applications slowed for the sixth time in seven weeks this past week to keep the housing market at a snails pace, according to the Mortgage Bankers Association. The disappointing news came after an increase in mortgage applications the prior week.
The slowdown was announced in the weekly Mortgage Banker survey just a day after the Consumer Financial Protection Bureau, started in the wake of the financial crisis, made public that it may issue rules for all residential mortgage services to follow this summer.
“National standards that apply to all residential loan servicers have the potential to create more confidence and certainty in the real estate market for both borrowers and servicers alike,” said Mortgage Bankers CEO David Stevens. “Borrowers would be protected by a single standard regardless of where they live and servicers would have one set of rules to comply with everywhere they operate.”
Refinances dropped 3.1% to take the index lower for the week, with purchase applications declining 0.5% on a seasonally adjusted basis. The drop-off indicates further slowing in the U.S. housing market, which is seeing fewer foreclosures sold as a result of lenders holding inventory off the market longer.
The nation’s five biggest banks agreed to a $25 billion settlement in the robo-signing scandal, including a provision that requires banks to make efforts to modify mortgages before filing a foreclosure and making foreclosure a last case option.
The average fully executed mortgage rate on a fixed 30-year loan dropped to 4.10% for consumers from 4.16% in the U.S. on 80% loan-to-value mortgages. The 15-year loan also fell for the week to average 3.37% from 3.40%.
The 5/1 adjustable rate mortgage dropped to 2.89% from 2.93%, the lowest the rate has been since early March. Lower yields paid to investors on U.S. Treasuries pushed mortgage rates lower for consumers as financial markets remained on a roller-coaster ride due to financial troubles in Europe.
Instability in European debt markets leads to troubles across the world destabilizing U.S. stock markets, including the New York Stock Exchange and bond markets where borrowing rates for banks and mortgage lenders are set.