Applications for purchase mortgages hit a 19-year low last week, as demand from borrowers continued to lag despite the imminent onset of the spring homebuying season, the Mortgage Bankers Association (MBA) reported.
Purchase loan applications fell a seasonally adjusted 4 percent during the week ending Feb. 21 from the week before and 15 percent from the same time a year ago, to their lowest level since 1995.
“[T]his is the time of year we would expect a significant pickup in purchase activity, and we are not yet seeing it,” MBA Chief Economist Mike Fratantoni said in a statement.
The weekly MBA survey is the latest indication that the housing recovery has lost some steam. Existing-home sales and pending home sales (which predict future existing-home sales) have both trended downwards in recent months.
Many real estate analysts say that increased mortgage rates and home prices are largely responsible. According to RealtyTrac, they’ve driven up the cost of owning a home by 21 percent in the last year.
In addition, housing experts cite unusually cold weather, tight credit (potentially exacerbated by new mortgage rules) and low inventory as headwinds.
But Jed Kolko, chief economist at Trulia, said there’s reason to believe that the demand from mortgage-financed buyers may recover soon.
“[R]ates remain low by historical standards, and the new mortgage rules could expand credit availability for loans that conform to the new standards, so part of the slowdown in purchase mortgage applications may be short-lived,” he said.