WASHINGTON
(By
Lynn Adler, MSNBC)
June 30, 2010 — Refinancing drove
total U.S. mortgage applications to an eight-month peak, as loan rates
fell to or near record lows, but demand to buy homes sank toward 13-year
lows last week, the Mortgage Bankers Association said on Wednesday.
The U.S. housing market continued to deflate after a spring sales spree,
fueled by now-expired federal tax credits of up to $8,000, robbed from
summer home buying.
The upside is now limited by unemployment stuck near 10 percent, heavy
foreclosure supply and pent-up selling from owners just waiting for the
right time to put their homes back on the market.
Mortgage refinancing requests jumped 12.6 percent in the week ended June
25 to the highest level since May 2009, as average 30-year mortgage
rates slid 0.08 percentage point to 4.67 percent, the industry group
said.
The 30-year loan rate flirted with the record low of 4.61 percent set in
March 2009, according to the MBA's records dating back to 1990, while
the 4.06 percent 15-year rate was an all-time lows.
Refinancing drove total mortgage applications up by 8.8 percent,
seasonally adjusted, last week. Nearly 77 percent of all loan requests
were for a refinancing, the highest share since April 2009.
Still, refi applications were about half the level seen in the spring of
2009 and purchase demand fell for the seventh week out of eight weeks
since the tax credit ended, said Michael Fratantoni, MBA's vice
president of research and economics.
Many qualified borrowers who could refinance have already taken
advantage of low rates when they previously touched current levels.
Others are not eligible, either
because of credit scores or home values that are well below their
current mortgage amounts.
Despite low borrowing costs and home prices average about 30 percent
less than their peaks four years ago, applications to buy homes dropped
3.3 percent to hover just above 13-year lows.
Buyers had to sign contracts by April 30 to get the $8,000 first-time
purchase credit or $6,500 move-up credit.
Sales of new homes plunged nearly 33 percent in May, however, to the
lowest since record keeping began in the early 1960s and existing home
sales unexpectedly fell 2.2 percent.
A double-dip recession is a growing
concern.
"We're not out of the woods yet," said James Angel, associate finance
professor at Georgetown University's McDonough School of Business in
Washington. "Rescue scheme after rescue scheme after rescue scheme has
been tried, but we still have millions of homeowners facing
foreclosure."
Home prices rose in April, but heavy unsold inventory of houses and
foreclosure activity will impede a sustained recovery, Standard & Poor's
said on Tuesday. "Prices will stay more or less stagnant as excess
inventory is worked off for several years," said Angel.
