Despite low rates, mortgage applications down again

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Despite the lowest mortgage rates since May, applications for new home loans continued to taper off, according to a Mortgage Bankers Assn. survey released today.

Seasonally adjusted applications for purchase loans decreased 4.7% during the week ending last Friday compared with the week before. In the refinance market, applications were down by 1.4%, according to the trade group’s weekly survey.

Rates for traditional 30-year fixed mortgages dropped below 5% in mid-September, helping to trigger a mini-boom in mortgage applications, particularly for refinance loans. It seemed some people had been biding time waiting for the ultra-low rates of last spring to return.

But recently, fewer people across the country have applied for new loans even though rates have continued to decline, suggesting that the waiting game for loans beginning with a “4” may have played out.

The Mortgage Bankers Assn. survey assumed borrowers had good credit and a 20% down payment or equity in their home.

It said the average contract interest rate for 30-year fixed-rate mortgages decreased to 4.83% from 4.90%, with upfront points paid to lenders (including the origination fee) increasing to 1.17 from 1.03 . It’s the lowest contract rate observed by the survey since mid-May of this year.

For 15-year fixed-rate mortgages, the average rate edged down to 4.32% from 4.33%, with points decreasing to 1.01 from 1.15 (including the origination fee).

The trade group does not break out statistics for California, where some brighter signs have been emerging in the housing markets of late. As my colleague Alejandro Lazo reports in a front-page Times story today, the median price and the volume of home sales increased in Southern California last month.

-- E. Scott Reckard