Mortgage loan applications dropped 2.14% for the week ending August 19, 2011 from one week prior, according to the Weekly Mortgage Applications survey conducted by the Mortgage Bankers Association.
Refinance activity fell 1.7% from the previous week, while purchase applications dropped 5.9% on a seasonally adjusted basis. Purchase applications are at their lowest level since December 1996, as volatile markets and the U.S. credit downgrade keep homebuyers on the fence.
“This decline impacted borrowers across the board, with purchase applications for jumbo loans falling by more than 15 percent, and purchase applications for government housing programs (FHA, VA, and USDA) falling by 8.2%. Although mortgage rates remain quite low, they increased over the week, bringing refinance application volumes down slightly,” said Mike Fratantoni, MBA’s Vice President of Research and Economics.
But there’s plenty of bad news that will continue to keep rates low, as strong indicators of a weak economy, as published by Stanley Morgan, fuel fears that the U.S. could be heading towards another recession. The Commerce Department has also reported that new home sales slipped 0.7% in July, a larger-than-anticipated decline.
Stocks have recently rebounded after Bernanke, in a speech in Wyoming, stated “The Federal Reserve will certainly do all that it can to restore high rates of growth an employment.” While he did caution that the Fed powers are limited, he chastised Congress for the disruptive negotiations that sent investors around the world into a frenzy.
Many mortgage analysts say, that while rates may not spike soon, now is the time to refinance for homebuyers who can be approved.
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