Weekly mortgage applications plummeted to a four-year low last week despite recent positive reads on the market.
Total applications fell 5.9 percent week-to-week on a seasonally adjusted basis, according to the Mortgage Bankers Association (MBA). Applications to refinance also fell, extending the dramatic fall that started with last summer's mortgage rate hike; they are off nearly 74 percent from a year ago.
"Refinance activity continued to slide despite a 30-year fixed rate that was unchanged from the previous week. The refinance index dropped 7 percent to the lowest level since 2008, continuing the declining trend that we have seen since May 2013," said Michael Fratantoni, chief economist for the MBA.
Applications to purchase a home, which fell four percent on week, are perhaps more telling of the housing market's current state. These applications, which generally mirror pending home sales – signed contracts to purchase homes – are down 21 percent on year.
Pending home sales were slightly higher in March from February, according to a report released by the National Association of Realtors earlier this week, but analysts surveying activity on the ground have warned that April sales could be slower. The mortgage application numbers would appear to confirm that.
"Purchase application volume remains weak, despite other data which indicate that the overall pace of economic growth is picking up. The combination of higher rates, new regulations and tight inventory all are leading to a weaker spring market than we have seen in years," said Fratantoni.