Low Mortgage Rates Fail to Ignite Mortgage Applications or Home Sales

Cheap financing is no longer enough for mortgages.

May 10, 2014 at 3:00PM

Mortgage rates are still low by historical standards, yet the latest data suggest cheap financing alone is no longer enough to lure more people to apply for mortgages.

The Mortgage Bankers Association's (MBA) weekly index that measures the volume of new refinance and purchase applications dropped 5.9 percent for the week ended April 25 compared with the prior week.

The index's refinance portion dropped 7 percent from the prior week while the purchase portion dropped 4 percent for the same period.

Mortgage applications slip to 13-year low
In a statement, MBA Chief Economist Mike Fratantoni said the MBA's index hit its lowest level since December 2000. Purchase applications were 21 percent lower than they were a year ago, and refinance activity dropped to the lowest level since 2008.

The share of adjustable-rate mortgages, or ARMs, was unchanged at 8 percent of total applications.

The MBA survey of mortgage bankers, commercial banks, thrifts and other lenders includes more than 75 percent of U.S. retail residential mortgage applications and has been conducted weekly since 1990.

Mortgage rates 'not part of the problem'
Mortgage rates aren't one of the myriad factors that arguably are holding back the housing market recovery this spring, according to the latest HSH.com weekly Market Trends newsletter.

"Even though they are above the 60-odd year lows set in December 2012 and nearly match last May, mortgage rates are not really part of the problem, since they remain favorable by almost any measure," said Keith Gumbinger, vice president of HSH.com and author of the Market Trends.

According to HSH.com's weekly Mortgage Rates Radar, a Tuesday-to-Wednesday wraparound weekly mortgage rates survey, the average rate for conforming 30-year fixed-rate mortgages remained relatively steady at 4.38 percent, while the conforming 5/1 Hybrid ARM rates remained unchanged, closing the survey at 3.16 percent.

Home sales uninspired
Sales of existing homes can be characterized as flat. Supplies of for-sale homes remain tighter than optimal, and sales of new homes improved early in the year and then slumped in March.

"There's little to suggest that a significant change in the slow pattern (of home sales) is under way," Gumbinger said.

This article Low Mortgage Rates Fail to Ignite Mortgage Applications or Home Sales originally appeared on The HSH blog.

Want that new house? Invest in big banking's little $20.8 trillion secret
There's a brand-new company that's revolutionizing banking, and is poised to kill the hated traditional brick-and-mortar banks. That's bad for them, but great for investors. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. To learn about about this company, click here to access our new special free report.

You may also enjoy these real estate articles:

Current mortgage rates

The pros and cons of the mortgage interest deduction

Homeownership's impact on crime

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers