Fewer borrowers apply for mortgages despite low rates
Interest rates may be scraping bottom, but there are only so many refinances the mortgage industry can crank out in the unsteady economy before every solid borrower who wants one has a replacement loan.
That was the message Wednesday from the Mortgage Bankers Assn., which released its survey of last week's applications for home loans. They were down overall by 12.2% after adjustments for the Memorial Day weekend and other seasonal factors.
An index of refinance activity fell 14.3% and purchase applications were off 5.7% on an adjusted basis.
In a statement, the lender trade group said purchase applications were still depressed because of the expiration of federal home-buying tax credits at the end of April.
By contrast, refinance applications dropped for the first time in a month despite 30-year mortgage rates averaging 4.8%. (Refis still made up 72% of all mortgage applications.)
"Despite the historically low rates, many homeowners have already refinanced recently, remain underwater on their mortgages, have uncertain job situations, or have damaged credit following this downturn, and therefore may not qualify to refinance,” said Michael Fratantoni, the mortgage group's vice president of research and economics.
-- E. Scott Reckard