A significant drop in refinancing applications offset rising purchase applications last week, leading to a decrease in overall demand for U.S. mortgages.
Overall mortgage demand decreased 2.9 percent on a seasonally adjusted basis. Unadjusted, demand dropped 1.9 percent.
The Mortgage Bankers Association reported Wednesday that its refinancing index fell 8.8 percent from the previous week.
The decline in refinancing was tempered by a seasonally adjusted 7.4 percent jump in purchase applications, led by a 11.9 percent increase in the government purchase index.
Unadjusted, purchase applications rose 8.5 percent from the previous week, and were 2.4 percent higher than the same week in 2009.
The increase in purchase applications was likely due to the pending end of the government’s homebuyer tax program, which is set to expire later this week as the month ends.
“Purchase activity continues to increase as we approach the end of the homebuyer tax credit program,” MBA Vice President of Research and Economics Michael Fratantoni said in a statement.
“Purchase applications were up almost 9 percent from a month ago, with a disproportionate share of the increase due to government purchase applications. Government applications for purchasing a home accounted for almost 49 percent of all purchase applications last week.”
Interest rates on 30-year fixed-rate mortgages rose from 5.04 percent to 5.08 percent, while rates on 15-year fixed rate mortgages increased from 4.34 percent to 4.38 percent. One-year adjustable-rate mortgages moved up to 7.03 percent from 6.95 percent.
The MBA said the refinance share of mortgage activity decreased to 55.7 percent of total applications from 60 percent the week before, hitting its lowest level since last August. The ARM share of mortgage activity remained unchanged at six percent.
The four week moving average for the seasonally adjusted market index is down 3.1 percent. For the adjusted purchase index, the average is up 1.6 percent, while the average is down 5.8 percent for the refinance index.
by RTT Staff Writer
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