There’s little cheer in the mortgage business these days, as the housing slowdown and subprime mess eat away at both industry and consumer confidence.
Despite all that, however, mortgage applications held their ground in recent weeks.
Not this time around. Mortgage activity fell last week for the first time in a month, partly because of slowing demand in the refinancing area.
The Mortgage Bankers Association said its index of mortgage application activity for the week ended March 16, declined 2.7% to 672.1. Refinancing accounted for 45.3% of all applications, down from 46.2% the previous week. The share of ARMS – adjustable rate mortgages -- also fell – from 21.9% to 20.9% from 20,9%.
The declines came even as rates on 15- and 30-year fixed mortgages barely budged and remained below year-ago levels.
Until recent years, the mortgage industry was home to little controversy, never mind drama, but a decade of red-hot housing prices has brought a flood of inventive products from no-interest loans to no-documentation ones. The subprime market – aimed at borrowers with poor credit history – also boomed. As long as prices were going up, neither lender nor borrower usually flinched at the loan’s rate or terms. Now, rising default rates among subprime borrowers are hitting lenders and the overall market. Overall demand -- for both new and refinanced mortgages -- is a trickle compared to a cascade.