Historically low mortgage rates are doing little to entice potential borrowers, recent mortgage application volumes suggest. Applications fell 4.3% last week, despite the fact that the average interest rate for 30-year fixed mortgages with conforming loan balances dropped to 4.18%, the Mortgage Bankers Association (MBA) reports.
According to the MBA's weekly survey of mortgage applications, the Refinance Index decreased 5.2% last week, the seasonally adjusted Purchase Index decreased 0.8% and the unadjusted Purchase Index decreased 1.7%. The unadjusted Purchase Index was 12.1% lower than the same week in 2010.
The MBA's vice president of research and economics, Mike Fratantoni, points out that borrowers still have an appetite for certain government-backed loans.
"Purchase borrowers continue to value the government lending programs that permit lower down payments," he says. "The government share of purchase applications decreased slightly to 41.6 percent last week, and while this is down from a recent peak of 50.4 percent in April 2010, it is still well above the pre-2009 survey average of 23.6 percent.
"Many refinance borrowers are opting to deleverage by moving to a 15-year term, with this product accounting for 27 percent of refinance volume last week," Fratantoni adds.