Mortgage rates dropped last week to their lowest level since May 2013, when the "Taper Tantrum" began, but home buyers today are not reacting.
Total mortgage application volume decreased 3.3 percent on a seasonally adjusted basis last week from the previous week, according to the Mortgage Bankers Association. Applications to refinance remained unchanged, but applications for loans to purchase a home fell 7 percent and are now 5 percent lower than a year ago.
"Amid plummeting oil prices and heightened concerns regarding global economic growth, interest rates dropped sharply through the course of the week, with longer-term Treasury yields falling more than 10 basis points," said Mike Fratantoni, the association's chief economist.
The average contract interest rate for 30-year fixed-rate conforming loan balances ($417,000 or less) decreased to 4.06 percent, the lowest level since May 2013, from 4.11 percent the previous week, according to the association.
Rates continued to drop Tuesday, as Treasury yields dipped even lower amid concerns over the value of Russia's currency. For several lenders, rate sheets were almost identical to those seen on May 22, 2013, when the Federal Reserve announced it would "taper" its purchases of mortgage-backed securities