Mortgage applications slump to two-year low in worrying sign for housing

Mortgage applications in the week ended July 26 fell nearly 4% to the lowest level in two years, according to data released Wednesday.
The Mortgage Bankers Association said applications fell as purchase applications fell 3% and refinance applications dropped 4%.
The drop comes as, per MBA numbers, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) was unchanged at 4.58%. That’s still nearly a full percentage point above rates from the spring.
For the housing market, it’s mortgage applications to buy, rather than the overall figure, which tend to correlate well with activity.
Despite the rise in rates, applications in June held up fairly well, and it hasn’t been until July that there’s been a noticeable drop — now those applications are down 13% from May’s high. Part of the current uptick in housing activity has come from investors and others who don’t need mortgages — 31%, per June data from the National Association of Realtors — but that still leaves 69% of transactions that do require home loans.
– Steve Goldstein