Shutdown reduces homebuyer demand for FHA loans to lowest level in nearly 6 years

The government shutdown has slowed applications for purchase loans backed by government programs to their lowest level in nearly six years, according to the latest Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications survey.

Purchase applications for government programs — primarily FHA — dropped by more than 7 percent over the week ending Oct. 11, to the lowest level since December 2007, the MBA said. Conventional purchase loan applications — loans eligible for purchase or guarantee by Fannie Mae and Freddie Mac — were down 4 percent.

All in all, applications for purchase loans were down a seasonally adjusted 5 percent. Refinance applications increased 3 percent from a week earlier.

The drop in mortgage applications came as the average rate for a 30-year fixed-rate mortgage with a balance of $417,500 rose to 4.46 percent from 4.42 percent a week earlier. Source: mbaa.org