U.S. home-buying applications sink to 13-year low

By Lynn Adler

NEW YORK, July 14 (BestGrowthStock) – Demand for loans to purchase
U.S. homes sunk to a 13-year low last week, and refinancing
demand also slid despite near record-low mortgage rates, the
Mortgage Bankers Association said on Wednesday.

Requests for loans to buy homes dropped 3.1 percent in the
week ended July 9, after adjusting for the Independence Day
holiday, to the lowest level since December 1996, the industry
group said.

Refinancing applications fell 2.9 percent, and the mortgage
market index that reflects total loan demand also fell 2.9
percent.

Average 30-year mortgage rates edged up 0.01 percentage
point to 4.69 percent, but were near the record low of 4.61
percent set in March 2009, based on MBA records dating back to
1990.

Rock-bottom borrowing costs are helping borrowers with
pristine credit to buy and those who still have equity in their
homes to refinance.

But high unemployment and foreclosures remain major
hurdles, and worries that prices could dip further are also
keeping many potential buyers on the sidelines.

The April 30 expiration of homebuyer tax credits has also
sapped summer purchasing activity. Buyers had raced to get in
under the gun for the tax incentives this spring, and demand
for loans to buy homes has fallen in nine out of the 10 weeks
since the credit expired.

Refinancings accounted for 78.7 percent of all applications
last week, the same as the prior week, the MBA said.

(Graphic: http://link.reuters.com/veb47m)

Talk has surfaced of a double-dip in U.S. housing, though
most economists doubt a second leg down would be nearly as
severe as the first.

“It’s sort of a self-fulfilling prophecy, but if there’s
going to be a double-dip you might as well stay on the
sidelines as opposed to coming in to buy,” said Taylor Woods,
president of Genpact Mortgage Services in Irvine, California, a
unit of Genpact Limited (G.N: ).

“With as much turmoil as there is around loans that need to
be modified, short sales, foreclosures — all of those signs
really indicate to buyers and investors that there will be
better prices come tomorrow,” he said.

Prices have toppled about 30 percent, on average, from
their peaks four years ago, according to Standard &
Poor’s/Case-Shiller indexes. Most estimates are for additional
single-digit declines.

“If there’s one part of the economy that might suffer some
sort of a double-dip it might come out of the housing market,”
said Cam Albright, economic research director and portfolio
manager at Wilmington Trust Investment Management in
Wilmington, Delaware.

Housing economists look for the autumn months to tell the
story once the ripple effects of the expired tax incentives are
in the past.

“There’s been an awful lot of demand shifted forward by the
first-time homebuyers credit,” Albright said. “Once we get into
the fall, maybe even sooner, some of that will begin to smooth
out.”
(Editing by Leslie Adler)

U.S. home-buying applications sink to 13-year low