Demand for purchase mortgages dropped by more than 30 percent from April to June and has fallen in eight out of the last nine weeks, the Mortgage Bankers Association said today.
Despite the fact that mortgage rates were at or near record lows, demand for purchase loans fell a seasonally adjusted 2 percent during the week ending July 2, and was down 34.7 percent from a year ago, the MBA said in releasing the results of its Weekly Mortgage Applications Survey.
In order to claim the federal homebuyer tax credit, buyers had to be under contract by April 30, although Congress has extended the deadline for closing on those purchases to Sept. 30.
"For the month of June, purchase applications declined almost 15 percent relative to the prior month, and were down more than 30 percent compared to April, the last month in which buyers were eligible for the tax credit," said Michael Fratantoni, MBA’s vice president of research and economics, in a press release.
Applications for refinancings, however, were up 9.2 percent from the previous week, to the highest level since May 2009.
Requests for refinancings accounted for 78.7 percent of all loan applications, the greatest refinance share since April 2009. The adjustable-rate mortgage (ARM) share of activity increased to 5.4 percent from 4.7 percent of total applications from the previous week.
The boost in refinancings helped push an index measuring both purchase and refinance mortgage loan application volume up a seasonally adjusted 6.7 percent from one week earlier.
The average contract interest rate for 30-year fixed-rate mortgages increased to 4.68 percent from 4.67 percent, with points decreasing to 0.86 from 0.96 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate slightly decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages increased to 4.11 percent from 4.06 percent, with points decreasing to 0.93 from 0.97 (including the origination fee) for 80 percent LTV loans. The effective rate also increased from last week.
The average contract interest rate for one-year ARMs increased to 7.2 percent from 7.05 percent, with points decreasing to 0.24 from 0.27 (including the origination fee) for 80 percent LTV loans.