By Mike Colpitts
Refinancing applications fell to the lowest level in more than a year and mortgage applications for new purchases also declined for the week, demonstrating mixed signals for the housing market, according to the Mortgage Bankers Association.
The composite index, a measure of loan application volume showed a decline of 12.9% on a seasonally adjusted basis for the week ending January 21, 2011. Refinances tumbled 15.3% from the previous week, while purchases fell 8.7%, according to the weekly survey accounting for nearly half of all mortgages made in the U.S.
Refinancing applications experienced the largest decline since January 2010 since the majority of homeowners who wanted to refinance have already done so or have applied and were unable to qualify for a refinance, despite near record low mortgage rates.
The bankers’ association purchase index also showed a decline to the lowest level since October 2010 as home buyers slowed their resumption at purchasing lower priced properties. Refinances composed 70.3% of all application activity, a slight 3% decline from the previous week as adjustable rate mortgages showed a slight increase in market share.
The average contracted rate on a fixed 30-year mortgage rose to 4.8% for the week from 4.77% the previous week on an 80% loan-to-value mortgage. Interest rates on an average 15-year fixed rate loan declined to 4.12% from 4.16% the prior week.
Rates are expected to remain low through the year as Washington policymakers attempt to re-stimulate the U.S. economy, but should also bounce back and fourth depending upon bond market activity.