U.S. home purchase loan demand slumps for 5th week

By Lynn Adler

NEW YORK, June 9 (BestGrowthStock) – U.S. home buying applications
sank for a fifth straight week to a fresh 13-year low, the
Mortgage Bankers Association said on Wednesday, suggesting that
tax credits had robbed more from future sales than expected.

Demand for loans to purchase houses fell 5.7 percent in the
week ended June 4 to the lowest level since February 1997, even
after adjusting to account for the Memorial Day holiday.

“Purchase applications are now 35 percent below their level
of four weeks ago, as homebuyers have not yet returned to the
market following the expiration of the homebuyer tax credit at
the end of April,” Michael Fratantoni, MBA’s vice president of
research and economics, said in a statement.

Last week also included news of tepid private-sector job
creation in May. [ID:nLDE65319Z].

Home buyers have been on hiatus since many rushed to sign
purchase contracts ahead of the April 30 deadline for up to
$8,000 in federal tax credits.

Refinancing activity, which had gained steam as mortgage
rates flirted with record lows, also suffered a set-back last
week.

The MBA refinance index fell 14.3 percent after rising for
four straight weeks, driving total mortgage applications down
12.2 percent in the week.

Mortgage rates remain affordable, with 30-year loans
falling to an average of 4.81 percent from 4.83 percent. At
their record low, according to the MBA, the rate was 4.61
percent in March 2009, but the rate is 1/2 percentage point
below the recent high of 5.31 percent in April.

Despite the historically low rates, Fratantoni noted
several factors that are affecting refinancings. Many
homeowners have already refinanced, while others remain under
water on their mortgages, have uncertain job situations, or
have damaged credit and therefore may not qualify to refinance,
he said.

Still, with purchase demand in a post-credit trough,
refinancing represented 72.2 percent of all applications last
week.

Investing Analysis
(Editing by Leslie Adler)

U.S. home purchase loan demand slumps for 5th week