By Marika Bastrmajian
Fewer Americans applied for new mortgages last week compared with the previous week, despite a modest slip in borrowing costs, a trade group reported on Wednesday.
Mortgage application rates fell 0.2 percent for the week ending Sept. 26, according to the Mortgage Bankers Association. The current drop continues from last week’s 4.1 percent decline, on a seasonally adjusted basis.
The MBA measures two different types of mortgage applications: one for home purchases, and the other for refinancing existing mortgages.
The number of refinance applications submitted, which accounted for a sizeable 56 percent of total applications, took a 0.3 percent dip from the previous week.
Purchase applications remained unchanged, according to the MBA.
While mortgage rates have risen from historic lows they reached after the housing market crash, they remain low by historic standards. Many other factors influence mortgage application activity, such as home prices, credit availability and all-cash homebuyers.
The average rate for 30-year fixed rate mortgages dropped for the first time in a month, falling to 4.33 percent from 4.39 percent the prior week, according to the MBA.
“Buyers are finding that homes are not as affordable as they were during the ‘perfect storm’ of home buying two years ago,” said Tim Lucas, editor at mymortgageinsider.com, a mortgage information website for consumers.
“Most eligible borrowers have already taken advantage of the rock bottom interest rates,” said Robert Gillis, vice president of Cape Ann Savings Bank.
According to Gillis, stricter underwriting standards have also made it difficult for first time home buyers, particularly if they are overburdened with student loan debt.
The decline in mortgage applications comes at a time when home prices are on the rise.
S&P/Case-Shiller reported Tuesday that average home prices have gone up 0.5 percent over June 2014 and 5.6 percent in the last year.
“Home prices continue to rise at two to three times the rate of inflation,” said David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices.