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The MReport Webcast: Thursday 9/4/2014

Mortgage application volumes finished out the summer on a low note, slipping nearly half a percentage point as home purchase numbers hit a near 20-year low. Based on weekly data released by the Mortgage Bankers Association, macroeconomics firm Capital Economics calculated a 0.4 percent monthly decline in mortgage applications in August. It was the third drop in the last three months, following declines of 0-point-1 percent in June and 3.4 percent in July.

Applications for home purchases also weakened for a third straight month, sinking to their lowest level since 1995 with another 3.6 percent decline. Out of those few applications that are coming in, an increasing share is focused at the higher end of the market, painting a bleak picture of demand among first-time and low-income homebuyers. Refinance applications, on the other hand, were up 2 percent in August following a decrease in July, owing in part to a drop in mortgage rates from 4 and a half percent earlier in the year. Still, though, refinance applications were down 34 percent year-over-year in August, reflecting the toll that last year's rise in interest rates took on demand.

After a poor reading earlier in the month, consumer sentiment in August recovered more than expected, despite concerns about the economy's future direction. The University of Michigan’s Survey of Consumer Sentiment climbed to 82.5 in the final August reading, slightly better than July's final value of and a sharp upturn from a mid-month reading of 79.2. The index has moved in a narrow range for nine months now, helping to buffer the economy from large swings in business investments, according to survey director Richard Curtin. However, he added that confidence has been unable to rise past modest levels as households earning lower incomes continue to see little financial improvement.

 

About Author: Jordan Funderburk

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