Remember 1997? It was my last year of college so I don’t have too solid a grasp on it, but I do remember being inundated with songs by the Spice Girls and Third Eye Blind. And apparently it was the last time that the demand for mortgages was as low as it is right now.
Not only are the loan applications for home purchases and refinances down significantly from the same time last year, they have dropped precipitously since the end of April. That was the deadline to sign a contract on a new home in order to take advantage of a federal tax credit.
Said a VP from the Mortgage Bankers Association, the group that released the latest sad stats:
Purchase applications are now 35 percent below their level of four weeks ago, as homebuyers have not yet returned to the market following the expiration of the homebuyer tax credit at the end of April.
In addition to the lack of a federal incentive to apply for a mortgage, MBA says that many current homeowners can’t qualify for a mortgage because they already owe more than their current house is worth, or they lack job security and perhaps have a blotch on their credit report.
The good news for those who can qualify is that interest rates continue to drop. According to the MBA, the average interest rate on a 30-year, fixed-rate mortgage is now at 4.81%, down .02 from just the week before.
To balance the world out, that .02 was seen as the slight bump in 15-year, fixed-rate mortgages, the average interest rate of which increased from 4.24 to 4.26% over the course of the week.
Maybe Chamillionaire should have looked into refinancing before handing his mansion back to the bank?
Mortgage Applications Decrease in Latest MBA Weekly Survey [Mortgage Bankers Association]