Mortgage Purchase Activity Falls To Lowest Level Since 1996

The MBA reports: Mortgage Applications Decrease with Purchase Index at Lowest Level Since 1996

The Refinance Index decreased 1.7 per cent from the previous week. The seasonally adjusted Purchase Index decreased 5.7 per cent from one week earlier and is at the lowest level in the survey since December 1996

“Another week of volatile markets and rampant uncertainty regarding the economy kept prospective homebuyers on the sidelines, with purchase applications falling to a 15-year low,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “This decline impacted borrowers across the board, with purchase applications for jumbo loans falling by more than 15 per cent, and purchase applications for the government housing programs (FHA, VA, and USDA) falling by 8.2 per cent. Although mortgage rates remain quite low, they increased over the week, bringing refinance application volumes down slightly”…

The average contract interest rate for 30-year fixed-rate mortgages increased to 4.39 per cent from 4.32 per cent, with points increasing to 0.88 from 0.86 (including the origination fee) for 80 per cent loan-to-value (LTV) ratio loans.

The following graph shows the


Purchase Index and four week moving average since 1990.

The four week average of the purchase index has been moving down recently and is at about 1997 levels. Of course this doesn’t include the large number of cash buyers … but purchase application activity was especially weak over the last two weeks.