Mortgage Apps Drop; 'Fear' Cited
According to statistics released today by the Mortgage Bankers Association, mortgage applications dropped last week for the first time in four weeks, in spite of a continuing favorable rate environemnt. The Market Composite Index, a measure of mortgage loan application volume, was 672.1, a decrease of 2.7 percent on a seasonally adjusted basis from 690.5 one week earlier. On an unadjusted basis, the Index decreased 2.5 percent compared with the previous week and was up 18 percent compared with the same week one year earlier, the MBA said. "There is plenty of fear in the marketplace right now, especially among buyers," said one industry source, quoted under HW's customary policy of anonymity. "Major media outlets have been stoking the fire, probably generating too much heat at this point. I don't know that right now is a horrible time to refinance in particular, in spite of subprime troubles, especially for prime borrowers." The MBA reported decreases in all major forms of loan applications, with an especially pointed drop in borrowers looking to refinance existing mortgages. The Refinance Index decreased 4.5 percent to 2208.6 from 2312.2 the previous week, the MBA said, and the seasonally adjusted Purchase Index decreased 0.9 percent to 410.6 from 414.3 one week earlier. The seasonally adjusted Conventional Index decreased 2.8 percent to 997.4 from 1026.3 the previous week, and the seasonally adjusted Government Index decreased 0.5 percent to 129.7 from 130.4 the previous week. Reflecting general borrower hesitance about the overall housing market, the MBA also said that the refinance share of mortgage activity decreased to 45.3 percent of total applications from 46.2 percent the previous week. Adjustable-rate mortgage (ARM) share of activity decreased to 20.9 from 21.9 percent of total applications from the previous week. For more information, visit http://www.mortgagebankers.org.