By Mike Colpitts
Demand for home mortgage purchase applications rose for the first time in more than a month, according to the Mortgage Bankers Association survey. The application for home purchase loan applications rose 4.4% for the week on near record low mortgage rates ending March 9.
However, the refinancing share of applications for home loans dropped 4.1% for the week, indicating that a drop-off in refinances has developed despite the program implemented towards the end of last year that essentially eliminated loan-to-value ratios for many underwater borrowers.
The rise in demand coincided with government data released last week showing that more than 200,000 workers went back to jobs for the third month in a row. The increase in hiring by employers, however, did little to budge the nation’s high unemployment rate, which hovers at 8.3%.
Workers who have been out of work for more than a year pressure the nation’s jobless percentage combined with the under employed, who make up the largest share of workers in the nation’s history, according to the U.S. Commerce Department.
The rise in home loan applications came after four straight weeks of declines, with mortgage rates hovering near record lows. However, the level of applications was essentially unchanged from one year ago, according to MBA’s vice president of research and economics. “Purchase activity remains subdued and within the narrow range we have seen since the expiration of the home buyer tax credit in 2010,” said economist Michael Fratantoni.
Despite the lower demand for mortgages from a year ago, application volume jumped 18% in February over January, but is still down a modest 2% from a year ago. The 30-year fixed rate fully contracted mortgage rate remained steady for the week at an average of 4.06%, according to the banker’s survey.
A combination of factors continue to pressure the nation’s housing market, including high long term unemployment and under employment, which needs to be improved before any real changes can develop in the nation’s housing markets.