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.
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