Mortgage Applications Fall, Point to Weakening Demand
U.S. mortgage applications fell last week, with demand for both refinancing and home purchase falling, an industry group said Wednesday.
The Mortgage Bankers Association's seasonally adjusted mortgage application index fell 3.6 percent to 681.7 in the week ended Nov. 16.
Most signs point to weakening demand for housing, with buyers fearful of purchasing a fast depreciating asset, economists have said.
The ongoing credit crisis is also making it harder for many potential borrowers to get loans approved by more stringent lenders.
"We have this multifaceted, Jenga tower of hurdles starting from the dust and plywood production stage and running all the way through clearing the mortgages to their final investor," Gregory Miller, chief economist at SunTrust Bank, Atlanta, said on Tuesday of the precarious U.S. housing market.
Builders can't move homes. Buyers are "left with gnawing fears that they'll wake up with buyer's remorse," that their home value soon drop in value even from the discount they managed to score. On top of that, "the purchaser has to go find a mortgage and standards are higher," he said.
Permits to build homes hit a 14-year low in October, the Commerce Department said on Tuesday, suggesting that conditions in the housing sector will worsen.
U.S. home builder sentiment is at all-time lows this month, the National Association of Home Builders said on Monday.
Long-term borrowing costs, however, remain fairly low. Average 30-year fixed-rate mortgages, excluding fees, dipped 0.01 percentage point to 6.18 percent.
This rate has been as high as 6.65 percent in July, at the year's peak, according to the Mortgage Bankers Association.
The MBA's seasonally adjusted purchase index dropped 2.0 percent to 424.1, while its seasonally adjusted index of refinancing applications fell 5.0 percent to 2,199.9.