Mortgage applications declined by roughly three percent during the last week in June according to the Mortgage Bankers Association, a leading industry group. This was the second straight week of declines despite 30-year fixed mortgage rates just barely above the historical lows set late in 2010.
According to HousingWire.com – a site I follow pretty closely – even the four-week average, which is a more statistically viable number due to the fact it smooths out some of the volatility, has declined despite very low interest rates:
The four-week average for the purchase index declined 1.5%.
Despite a reported drop in the refinance index, refinancing applications still make up 69.5% of all mortgage activity.
Mortgage rates also declined this week, hitting their lowest point in seven months, with the 30-year, fixed-rate mortgage declining to 4.46% from 4.57% last week.
This certainly isn’t good news for the housing market. Affordability – a measure of home prices, mortgage interest rates, and consumers’ income – is near record highs thanks to the nearly one-third fall in prices from the peak set in 2006 and record low mortgage rates, but even it isn’t enough to get non-investor buyers off the sidelines and into their new homes.
As is usual, the biggest factor in all of this is the economy. People are afraid that the economic turn around has slowed (it has) and that we are entering into a double-dip recession (we are), so it’s not as if there’s a ton of confidence out there to get people to make the single largest purchase of their lives.
That being said, if the economy rebounds in the second half of this year and employment picks up, I don’t think it’s unrealistic to be able to finally call the bottom of the housing market.
But, that’s a big if.
Now, enjoy this YouTube clip talking about housing prices: