Mortgage Rates and Home Buyers Decline

Mortgage rates continue to decline, continuing to hover near the record lows, while the number of home buyers applying for mortgages has also dropped. Hard to imagine that rates will get lower any time soon.

The number of homeowners applying to refinance their homes has fallen modestly, however, according to the Mortgage Bankers Association. The drop of only 1.6% in refinance applications may not yet be a significant change from the upward trend of refinancing in recent weeks.

The long trend of low mortgage rates, which has lasted more than a year as the Fed keeps its borrowing rate at or near 0% is part of government efforts to re-energize home sales.

“Purchase applications are now 35% 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,” MBA’s chief economist Michael Fratantoni said. “Although rates remained essentially flat, refinance applications dropped this past week for the first time in a month.”

A large number of homeowners have already refinanced mortgages or are unable to do so as a result of being upside down on their loans. Some homeowners have also lost their jobs, which makes it difficult to refinance without government help.

Unemployment rates in especially hard hit housing markets scattered throughout the nation has topped 21% and is critical to the real estate market.