Mortgage Applications Slip Nearly 25 Percent

Mortgage applications dropped a seasonally adjusted 24.5 percent in the week ending February 6, 2009, according to a weekly survey released Wednesday by the Mortgage Bankers Association. Refinance applications slouched a significant 30.3 percent, making up 66.7 percent of total applications, compared to 73.2 percent the prior week. MBA’s purchase index eased 9.8 percent, reaching its lowest level since 2000. The seasonally adjusted conventional purchase index decreased 11.1 percent, while the government purchase index decreased 7 percent. The widespread decline in mortgage application volume might be contributed to the slight, yet steady increase in mortgage rates seen in the last few weeks; although, in the week ending February 6, the MBA found rates actually decreased. The four-week moving average of raw application volume, which often corrects for undue volatility, declined a whopping 20 percent from the previous week. The four week moving averge is down 8.7 percent for the seasonally adjusted purchase index, while the average is down 23.9 percent for the refinance index. A separate survey conducted by Mortgage Maxx LLC — which adjusts raw application volume to account for multiple submissions by a single household — showed application activity slipped 9.3 percent on a seasonally adjusted basis for the week ending February 6. “The bloom is definitely off the MAX as a second wave of mortgagors fails to materialize,” said Paul Descloux, Mortgage Max publisher. “With rates now moving up and a four percent mortgage rate so far mythical, a repeat of 2008 may well be underway unless the Fed can buy down rates.” Write to Kelly Curran at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.