New Lows Visit 30-Year and 15-Year Mortgage Rates

With refinancing activity continuing a backslide, the number of homebuyers filing mortgage applications waxed over last week, falling by 4.9 percent on a seasonally adjusted basis, according to a weekly survey by the ""Mortgage Bankers Association"":http://www.mbaa.org/default.htm (MBA). The trade group recorded new lows for 30-year and 15-year loan contract interest rates.

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According to the MBA's Market Composite Index, a yardstick for mortgage loan applications nationally, numbers declined by a seasonally unadjusted 5.3 percent. Refinancing activity dipped by 6.3 percent from the past week, even while the MBA indexed a 0.2-percent upshot in purchases. On an unadjusted basis, the Purchase Index recorded a 2.1-percent decline ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô a contrast with 13.5 percent registered over the same period last year.

Commenting on the figures, Mike Fratantoni, MBA's VP of research and economics, said in a ""statement"":http://www.mbaa.org/NewsandMedia/PressCenter/ that rates for 30-year and 15-year fixed-rate mortgages each approached new lows in their survey before Labor Day weekend.

""Despite these rates,"" he added, ""refinance application volume fell for the third straight week, and is more than 35 percent below levels at this time last year. Purchase application volume remains relatively flat at extremely low levels, close to lows last seen in 1996.""

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Across the MBA's other indices, the four-week moving average fell by a seasonally adjusted 3.2 percent and a seasonally unadjusted 3.7 percent. The Refinance Index also saw a 3.1-percent decline on average.

Total applications bore witness to less refinancing activity overall, as the numbers declined from 77.8 percent to 77.1 percent. Rates for adjustable-rate mortgages (ARMs) meanwhile lingered at 7.1 percent from last week.

For 30-year and 15-year fixed-rate mortgages, contract interest rates on average fell from 4.32 percent to 4.23 percent and from 3.49 percent to 3.41 percent, respectively. According to the MBA, these numbers reflect the second lowest rate for the 30-year and the absolute lowest for the 15-year since the launch of the survey in 1990.

The MBA's latest figures fail to buck trends from August.

Writing in a widely distributed U.S. Housing Data Response that runs weekly, Paul Dales, a senior U.S. economist with ""Capital Economics"":http://www.capitaleconomics.com/, ascribed continuing lows for mortgage application volume over last month to a failure by ""ultra-loose monetary policy├â┬ó├óÔÇÜ┬¼├é┬ª to boost economic activity.

""Despite the fall in 30-year mortgage rates to within a whisker of a record low,"" he wrote, ""mortgage applications for refinancing have risen only modestly and applications for home purchase have dropped to a 15-year low.""

According to Dales, historically low mortgage rates likewise do nothing to encourage homebuyers. A rush by investors to scoop up U.S. Treasury debt last week forced a decline in 10-year Treasury yields, alongside rates for the 30-year loan.

""All this confirms what we have been saying all along; that the price of credit is not the problem,"" he added. Instead, the sharp fall in house prices and the still high unemployment rate have significantly reduced the ability and willingness of households to borrow.""