Housing Indicator Hits the Worst Level Since December 2000

Posted by Steph Kaye on Sunday, May 4th, 2014 at 10:42am.

Mortgage Applications are Decreasing

 (Mortgage Bankers Association) 

The mortgage market continues to deteriorate. Even though historically low interest rates, the mortgage composite index reached its worst level in over a decade (A grouping of equities, indexes or other factors combined in a standardized way, providing a useful statistical measure of overall market or sector performance over time. Also known as a "composite index" according to Investopedia). In the latest update from the Mortgage Bankers Association, for the week ended April 25, applications for home loans dipped 5.9%  on a seasonally adjusted basis from one week earlier. The index fell 5%  on an unadjusted basis.

Housing affordability issues and a small rebound in interest rates have caused a consistent slide in mortgage applications over the past year. Applications are near their worst level in years. The Refinance Index decreased 7%  from the previous week, while the Purchase Index declined 4%  and remained 21%  below year-ago levels on an unadjusted basis.

Both purchase and refinance application amount fell last week, and the market composite index is at its lowest level since December 2000,” said Mike Fratantoni, the Mortgage Bankers Association’s chief economist. “Refinance activity also continued to slide despite a 30-year fixed rate that was unchanged from the previous week. The refinance index dropped 7% to the lowest level since 2008, continuing the declining trend that we have seen since May 2013.”

Overall, the refinance share of mortgage activity accounted for 50% of total applications,  which is its worst level since July 2009 and down from 51% a week earlier. In fact, the refinance share of mortgage activity has now dropped for 11 of the past 12 weeks.

The average interest rate for a 30-year fixed mortgage rate was still holding, at 4.49%. Meanwhile, the average rate for a 15-year fixed-rate mortgage went down, from 3.55%  to 3.53%. Although mortgage rates are still near historic lows, details about the housing recovery  will most likely draw more skepticism this year as higher prices and unmoving wages cause affordability issues. In the prior report, the MBA revealed that the average loan size for purchase applications had reached its highest level in the history of the survey, at $280,500.

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 Lang Premier Properties are Birmingham Realtors specializing in Oakland County Real Estate. Stephanie is an agent with Max Broock in Birmingham, Michigan. See what past clients have to say about Stephanie Lang.  Lang Premier Properties looks out for your best interests when you purchase a new custom luxury home. We always recommend working with an experienced luxury real estate agent when buying a new luxury estate.

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