Mortgage Credit Is Still Too Tight [Federal National Mortgage Assctn Fnni Me, Federal Home Loan Mortgage Corp]

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October 27, 2014 12:18pm NYSE:IYR

housing-etpMore 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.

Refinance 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.

“Continuing 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.”

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