Home purchase mortgage applications fell to a 15-year low as applications for new loans tumbled this last week, despite the drop in mortgage rates to all time record lows, according to the Mortgage Bankers Association.
The bankers’ combined mortgage index dropped 2.4% from the previous week. Refinancing surprisingly fell 1.7% on a seasonally adjusted basis. The fall in refinances came as volatility in financial markets scarred off homeowners from considering a refinance.
The purchase index fell 5.7% to the lowest level since December 1996 amid growing concerns over weakness in the U.S. economy.
“Another week of volatile markets and rampant uncertainty regarding the economy kept prospective homebuyers on the sidelines, with purchase applications falling to a 15-year low,” said MBA’s chief economist Mike Fratantoni. “This decline impacted borrowers across the board, with purchase applications for jumbo loans falling by more than 15% and purchase applications for the government housing programs falling by 8.2 percent.”
While applications for home purchases fell, the share of refinancing rose to compose 79.8% of all mortgage activity, representing a one-percent increase from the prior week, according to the bankers’ weekly survey which accounts for about half of all U.S. mortgages.