Current Mortgage Rates Down; Mortgage Applications Down

In an unlikely scenario last week, mortgage applications slipped despite current mortgage rates edging lower toward 5%. For the third consecutive week, mortgage applications fell, with a decline of 12.3% from the week prior for the week ending Friday, October 23, 2009.

Many industry experts believe the drop in mortgage application activity is due largely to the looming expiration of the $8,000 first-time homebuyer tax credit. The uncertain future surrounding the popular tax credit has left a void in purchase transactions. With little more than a month before the November 30 expiration, borrowers interested in purchasing their own home are hoping the federal government extends the tax credit into the first quarter of 2010, at least.

According to the Mortgage Bankers Association (MBA), in addition to the 5.2% decline in purchase applications, a surprising 16.2% decline in refinance applications was reported. Also reported by the MBA, current mortgage rates on the ever-popular 30-year fixed-rate mortgage subtly slipped to 5.04%, just down from 5.07% the wee before. Meanwhile, the average current mortgage rate on a 15-year fixed-rate mortgage increased, however slightly, to 4.53% from 4.51%. Current mortgage rates for adjustable-rate mortgages (ARMs) declined a bit more significantly to 6.79% from 6.86%.

Estimated figures expected to be released today show the sales of new home construction increased at an annual rate of 440,000 units last month, which would be a substantial increase of 2.6% from September.

-Robert Hyder