Tax-credit deadline passes, mortgage applications swoon
You didn't need to wait long for a sign of what the end of the home buyer tax credit program means: Mortgage applications by buyers fell 27 percent last week -- following a 10 percent drop the week before -- to their lowest level in 13 years.
"The data continue to suggest that the tax credit pulled sales into April at the expense of the remainder of the spring buying season," Michael Fratantoni, the Mortgage Bankers Association's vice president of research and economics, said in a statement this week.
It's been mostly downhill for new-purchase mortgage applications since 2005, as this chart shows, but the figures did spike last fall (when the credit was originally set to expire) and again more recently.
Refinance applications did rise nearly 15 percent last week as homeowners tried to take advantage of dropping mortgage rates. (Refi requests accounted for two-thirds of all applications.) The average interest rate for a 30-year fixed rate mortgage was about 4.8 percent that week.
As columnist Eileen Ambrose notes, experts are thanking/blaming fears about financial instability in Greece for the low U.S. mortgage rates. Investors, seeing U.S. Treasuries as a safer bet than European debt, are parking their money there, "and the demand pushed down long-term interest rates that influence the 30-year fixed rate mortgage," Ambrose writes.
Financial publisher HSH Associates says the downward trend has continued: "After setting 2010 lows last week, mortgage rates managed another downshift this week and are once again near historic -- approximately 50-year -- lows."
Any deep thoughts to share on rates or the pipeline of future buyers?