Applications for US home mortgages drop to slowest pace since 2000
Thursday, 31 July 2008
NEW YORK, July 30 (Agencies): Applications for US home mortgages dropped to their slowest pace since December 2000 as loan rates hovering near one-year highs compounded the housing market's woes, according to data from an industry group Wednesday.
The Mortgage Bankers Association (MBA) said its seasonally adjusted index of mortgage application activity declined 14.1 per cent to 420.8 in the week ended July 25. The decline was the most severe move in percentage terms since May.
The MBA's seasonally adjusted index of refinancing applications plunged 22.9 per cent to 1,074.4 last week. The MBA's gauge of loan requests for home purchases fell 7.8 per cent to 309.5.
Fixed 30-year mortgage rates averaged 6.46 per cent in the week, compared with a one year-high of 6.59 per cent in the prior week, the MBA said.
While concerns of faster inflation have boosted the market rates that influence mortgages, the credit crisis has hurt banks' ability to support the market for mortgage-backed securities, applying upward pressure to the rates that lenders charge to consumers.
A slowing rate of applications suggests potential homebuyers may be expecting better deals in the future as rising foreclosures and a softening economy nudge home prices lower.
Prices of US single-family homes measured in 20 major metropolitan areas have dropped about 16 per cent in the past year, with few signs of recovery, according to S&P/Case Shiller Home Price Index Tuesday.
Sales of existing homes in June also dropped to their slowest pace in 10 years, the National Association of Realtors said last week.
Meanwhile, President Bush signed Wednesday a massive housing bill intended to provide mortgage relief for 400,000 struggling homeowners and stabilise financial markets.
Bush signed the bill without any fanfare or signing ceremony, affixing his signature to the measure he once threatened to veto, in the Oval Office in the early morning hours. He was surrounded by top administration officials, including Treasury Secretary Henry Paulson and Housing Secretary Steve Preston.
"We look forward to put in place new authorities to improve confidence and stability in markets," White House spokesman Tony Fratto said. He said that the Federal Housing Administration would begin right away to implement new policies "intended to keep more deserving American families in their homes."
The measure, regarded as the most significant housing legislation in decades, lets homeowners who cannot afford their payments refinance into more affordable government-backed loans rather than losing their homes.
It offers a temporary financial lifeline to troubled mortgage companies Fannie Mae and Freddie Mac and tightens controls over the two government-sponsored businesses.
The House passed the bill a week ago; the Senate voted Saturday to send it to the president.
Bush didn't like the version emerging from Congress, and initially said he would veto it, particularly over a provision containing $3.9 billion in neighborhood grants. He contended the money would benefit lenders who helped cause the mortgage meltdown, encouraging them to foreclose rather than work with borrowers.
But he withdrew that threat early last week, saying hurting homeowners could not wait - and even blaming the Democratic Congress' delays in action for forcing an imperfect solution.
Meanwhile, many Republicans, particularly those from areas hit hardest by housing woes, were eager to get behind a housing rescue as they looked ahead to tough re-election contests.
The Mortgage Bankers Association (MBA) said its seasonally adjusted index of mortgage application activity declined 14.1 per cent to 420.8 in the week ended July 25. The decline was the most severe move in percentage terms since May.
The MBA's seasonally adjusted index of refinancing applications plunged 22.9 per cent to 1,074.4 last week. The MBA's gauge of loan requests for home purchases fell 7.8 per cent to 309.5.
Fixed 30-year mortgage rates averaged 6.46 per cent in the week, compared with a one year-high of 6.59 per cent in the prior week, the MBA said.
While concerns of faster inflation have boosted the market rates that influence mortgages, the credit crisis has hurt banks' ability to support the market for mortgage-backed securities, applying upward pressure to the rates that lenders charge to consumers.
A slowing rate of applications suggests potential homebuyers may be expecting better deals in the future as rising foreclosures and a softening economy nudge home prices lower.
Prices of US single-family homes measured in 20 major metropolitan areas have dropped about 16 per cent in the past year, with few signs of recovery, according to S&P/Case Shiller Home Price Index Tuesday.
Sales of existing homes in June also dropped to their slowest pace in 10 years, the National Association of Realtors said last week.
Meanwhile, President Bush signed Wednesday a massive housing bill intended to provide mortgage relief for 400,000 struggling homeowners and stabilise financial markets.
Bush signed the bill without any fanfare or signing ceremony, affixing his signature to the measure he once threatened to veto, in the Oval Office in the early morning hours. He was surrounded by top administration officials, including Treasury Secretary Henry Paulson and Housing Secretary Steve Preston.
"We look forward to put in place new authorities to improve confidence and stability in markets," White House spokesman Tony Fratto said. He said that the Federal Housing Administration would begin right away to implement new policies "intended to keep more deserving American families in their homes."
The measure, regarded as the most significant housing legislation in decades, lets homeowners who cannot afford their payments refinance into more affordable government-backed loans rather than losing their homes.
It offers a temporary financial lifeline to troubled mortgage companies Fannie Mae and Freddie Mac and tightens controls over the two government-sponsored businesses.
The House passed the bill a week ago; the Senate voted Saturday to send it to the president.
Bush didn't like the version emerging from Congress, and initially said he would veto it, particularly over a provision containing $3.9 billion in neighborhood grants. He contended the money would benefit lenders who helped cause the mortgage meltdown, encouraging them to foreclose rather than work with borrowers.
But he withdrew that threat early last week, saying hurting homeowners could not wait - and even blaming the Democratic Congress' delays in action for forcing an imperfect solution.
Meanwhile, many Republicans, particularly those from areas hit hardest by housing woes, were eager to get behind a housing rescue as they looked ahead to tough re-election contests.