The mortgage business showed a slowdown this past week and hit the lowest level of the year reinforcing the notion that the slowdown in the real estate market is kicking in. Interest rates also fell during the week making the slowdown that more of an indicator of the marketplace.
It is very evident that the steam is coming out of the housing market even though rates moved down,” said Celia Chen, director of housing economics at Moody’s Economy.com, a consulting firm.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.31 percent, down 0.11 percentage point from the previous week’s 6.42 percent level, a near four-year peak.
Fixed 15-year mortgage rates averaged 5.99 percent, down from 6.06 percent the previous week. Rates on one-year adjustable-rate mortgages (ARMs) increased to 5.68 percent from 5.64 percent.
“A lot of consumers have been having affordability problems, which is why a lot of them have been taking out ARMs,” said Chen. “But with ARM rates rising, fewer people have been able to afford a home, which was also behind last week’s decline in applications.”
The MBA’s seasonally adjusted purchase mortgage index considered a timely gauge of U.S. home sales — dropped 2.3 percent to 393.6 from the previous week’s 403.0. The index was only a few points above its two-year low of 391.7 reached during the week ended February 10. The index was also significantly below its year-ago level of 446.4. via Yahoo! News.
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