rebuild.org finance news:

Back to Latest News Headlines

Mortgage Rates Rise Driving Applications Down

[Feb 26, 2009.]


Mortgage loan applications dropped last week as rates increased.

Bloomberg.com reported that The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan decreased 15.1 percent to 743.5 in the week ended Feb. 20 from 875.3 in the prior week. The group’s refinancing measure dropped 19.1 percent and the purchase index slipped 2.6 percent.

The report was adjusted to account for the lack of activity over President's Day.

Many believe that prospective home buyers are waiting for home values and interest rates to stabilize. They are hesitant to pull the trigger and risk values dropping further or the government stepping in later to subsidize lower mortgage rates. First time home buyers are hesitant to purchase a home given the economic turmoil and fears of job loss.

Some homeowners have been holding off on refinancing while they wait for more details on the government's plan to help stimulate the housing market. Talk of reduced interest rates and friendlier underwriting guidelines could pull a lot of people off the sidelines, however, not until specifics are announced.

“Some people may be waiting to see the final details of the Obama plan before they jump in,” Celia Chen, an economist at Moody’s Economy.com in West Chester, Pennsylvania, said before the report. “Demand for homes still remains weak and that’s because job losses continue to mount.”

What the Mortgage Banker's Association index is unable to capture is the number of applications that turn into successfully completed and funded loans. Much attention has been paid to the number of loan applications on a weekly basis, however, many of those that apply are being turned down for a variety of reasons. Tighter lending guidelines, higher credit score requirements, and declines in home value have prevented many of those looking to refinance or purchase a home from obtaining a new mortgage.


About Author:

Chris Rocks is the Regional Director of the National Credit Federation (NCF), a consumer advocacy group that assists small business owners and consumers overcome debt and credit challenges.

news subscription:

Easily subscribe to the rebuild.org news feed.

Read our news without even visiting our site!

Subscribe to our news


news archive:

Rebuild.org monthly news archive