Thursday, October 23, 2014

Slump in mortgage rates fails to rally home buyers

Slump in mortgage rates fails to rally home buyers - Yahoo Finance

More proof that low mortgage rates are not the key to home ownership:
Rates dropped to their lowest level in nearly 18 months last week,
causing an 11.6 percent rise in applications, the Mortgage Bankers
Association reported Wednesday. The gains, however, were driven entirely
by refinances, just as they have been for several weeks.

applications jumped a whopping 23 percent week-to-week on a seasonally
adjusted basis; volume was at the highest level since November. Mortgage
applications to purchase a home saw no boost at all from lower rates,
falling 5 percent from the previous week and 9 percent from a year ago.
concerns about weak economic growth in Europe and a few U.S. economic
indicators that came in below expectations caused a flight to quality
into U.S. Treasurys last week, leading to sharp drops in interest
rates," said Mike Fratantoni, the MBA's chief economist. "Mortgage rates
have fallen close to 30 basis points over the last four weeks."
The average contract interest rate for 30-year fixed-rate mortgages
with conforming loan balances ($417,000 or less) decreased to 4.1
percent, the lowest level since May 2013, from 4.2 percent, according to
the MBA. Some lenders are now offering rates below the psychologically
significant 4 percent line, but only to their highest credit-worthy
customers. The average loan balance for refinance applications increased
to $306,400, the highest level in the MBA survey's history, suggesting
that wealthier homeowners are benefiting most from the drop in rates.
Sales of existing homes did increase in September by just over 2
percent from August, according to the National Association of Realtors;
however, they are weaker than a year ago, when investors were competing
for distressed homes and pushing prices ever higher. The NAR's chief
economist, Lawrence Yun, said sentiment among real estate agents was at
its lowest level of the year, suggesting that sales may be weaker going
"It's turned into
what I think is really a classic buyers' market," said Sherry Spinelli,
a real estate agent with Long and Foster in Northern Virginia. "More
days on market, prices are coming down, the offers are even lower and
there are just a lot of houses out there, so it's a challenge for
sellers. I think you have to lower the price in order to sell it."