Mortgage applications hit a nine-month high last week by an increasing demand for mortgage refinancing. On the opposite side of the coin demand for loans to buy homes sank to a 13-year low as a result of would be buyers waiting for a better market now that the federal tax credits have expired.
Mortgage Bankers Association reported last week that mortgage rates are still at record lows which gives homeowners the opportunity to cut their monthly payments by refinancing at a lower rate.
At the beginning of July refinancing requests jumped 9.2 percent to the highest level since May 2009 which raised the total amount of applications by 6.7 percent which is their highest level since early October 2009. Demand for mortgages to buy homes slipped 2 percent.
The decrease in the number of mortgage applications to purchase homes had its eighth weekly drop in the nine weeks since the federal tax credits expired on April 30th.
Michael Fratantoni, MBA's vice president of research and economics, said in a statement, "For the month of June, purchase applications declined almost 15 percent relative to the prior month and were down more than 30 percent compared to April, the last month in which buyers were eligible for the tax credit."
Refinancings accounted for 78.7 percent of all applications last week despite the fact that the average 30-year mortgage rate remained close to 4.68 percent.
According to Robert Andrews, senior research analyst at IBISWorld in Santa Monica, California, as the housing market adjusts to the end of government incentives, home purchases will remain weak over the next several months, and home prices should bottom around the third quarter.