Activity Down but so are Rates....

An apparent lack of borrowers eligible to take advantage of the near record-low mortgage rates is pushing mortgage demand lower, according to the Mortgage Bankers Association.

Refinance activity fell 15.1 percent last week compared to the previous week, while the seasonally adjusted purchase index slipped 3.3 percent.

On an unadjusted basis, purchase applications were up 2.8 percent compared with the previous week, but 4.5 percent lower than the same period a year ago.

Overall, mortgage applications were off 10.9 percent on a seasonally adjusted basis (-10.1% unadjusted) for the week ending January 22, and 19.8 percent compared with the same week a year earlier.

“Refinance activity fell substantially last week,” said Michael Fratantoni, MBA’s Vice President of Research and Economics, in the release. “Although rates remain low, there appears to be a smaller pool of borrowers who are willing and able to refinance at today’s rates.”

This could be the case because many homeowners are now underwater, owing more on their mortgage than the current value of the property.

It may also be attributable to income loss and/or unemployment for a number of borrowers, or a desire to take advantage of a potentially more favorable loan modification.

Or the fact that most who planned to refinance did so already, back in 2009.

The popular 30-year fixed averaged 5.02 percent up last week, up from 5.00 percent even, while the 15-year fixed increased just a single basis point to 4.34 percent.

The one-year adjustable-rate mortgage increased to 6.84 percent from 6.72 percent, making it a very undesirable choice for homeowners.

The MBA’s weekly survey covers more than half of all retail, residential home loan applications, but does not factor out duplicate or declined apps.


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