Mortgage Activity Eases as Rates Edge Up
WASHINGTON (
) -- Mortgage applications fell last week as
pushed higher.
The volume of mortgage loan applications decreased 2.3% on a seasonally adjusted basis in the week ending Dec. 10, the Mortgage Bankers Association said early Wednesday.
Mortgage activity fell 0.9% in the prior week.
>>Homebuilder Stocks: Behind the Numbers
Refinancing application volume decreased 0.7% from the previous week. It was the fifth consecutive weekly drop in refinancing activity, and came on the heels of a 1.4% drop in the prior week. Home-purchase loan applications fell 5% in the week, on a seasonally adjusted basis, after ticking 1.8% higher a week earlier. On an unadjusted basis, the MBA's purchase index was 16.6% lower than in the year-earlier week.
A total of 76.7% of all loan applications last week were for refinancing existing mortgages, up slightly from a 75.2% share in the prior week.
The average rate on a 30-year fixed mortgage increased to 4.84%, from 4.66% in the prior week. It was the highest rate observed since early May and was the fifth consecutive weekly increase. Still, mortgage rates remain near all-time lows.
Some potential homebuyers have decided to go ahead and sign contracts, hoping to lock in still-low rates. Homebuilder
Toll Brothers
(TOL) - Get Report
, which
surprised investors with a return to year-over-year profitability in its fiscal fourth quarter, recently said deposits jumped 10% in the second half of November compared with year-earlier results.
"In the last two weeks, interest rates have been going up," said Toll Brothers chairman Chairman Robert Toll on a Dec. 2 earnings call with investors and analysts following the release of its quarterly report. "So finally there is no longer a reason to sit and wait."
>>Toll Brothers Beats, Returns to Profitability
|
Near-record-low mortgage rates failed to spark robust demand for housing in recent months, but continue to have an effect on homeowners looking to lower their monthly payments through refinancing, though even refi activity has been waning as mortgage rates bounce off lows observed earlier this year.
While any mortgage demand can be viewed in a positive light, the still-struggling housing market continues to be plagued by sluggish demand, in part because of the tight credit market and inability of many potential buyers to access the credit they need to finance a mortgage.
Many Americans suffer from negative equity, where the amount they owe on their home is higher than the value of it, making them unqualified for refinancing.
Still-depressed home prices do not seem to make it any easier. The S&P/Case-Shiller 20-city index of national home prices rose slightly in September but home prices across the U.S. fell 2% in the third quarter after rising 4.7% in the second quarter. September's 0.6% uptick disappointed market watchers who expected the index to rise 1% in the month.
>>Home Prices Continue to Cool
Several market watchers consider weakening home prices an ominous sign for the overall housing market.
"Another weak report, weaker than last month," said David M. Blitzer, chairman of the index committee at Standard & Poor's, commenting on the disappointing Case-Shiller data released in late November. "The national economy is certainly the number one issue for housing. Additionally, there is a large supply of houses on the market and further, hidden, supply due to delinquent mortgages, pending foreclosures or vacant homes. New construction is running at less than half the pace needed to meet normal demand, so a sustained recovery could be a ways off," Blitzer continued.
Sales of newly built homes unexpectedly fell 8.1% in October to a weaker-than-expected annual rate of 283,000, according to a recently released report by the Commerce Department.
>>New-Home Sales Fall 8.1% in October
The government data followed a report from the National Association of Realtors which showed that
sales of previously occupied homes fell 2.2% in October to a slightly better-than-expected seasonally adjusted annual rate of 4.43 million units.
>>Existing-Home Sales Fall 2.2% in October
Homebuilders began construction on 11.7% fewer homes in October to an annualized rate of 519,000, far worse than the expected contraction rate. Applications for building permits, meanwhile, inched 0.5% higher to 550,000, from 547,000. Data for November's housing starts and building permits is due out next week, on Dec. 16. Economists' consensus call is for housing starts to increase to an annualized rate of 545,000, while building permits, a measure of future building activity, are expected to increase to a rate of 570,000.
>>Housing Starts Fall 11.7% in October
Data on housing starts and building permits for November is expected to be released on Thursday morning. Economists, on average, expect housing starts to rebound 5% to an annualized rate of 545,000. Building permits, a measure of future building activity, is expected to have increased 1.8% to a rate of 560,000.
Pending home sales rebounded 10.4% in October, better than expected though 20.5% lower than in the year-earlier month.
>>Pending Home Sales Rebound 10.4% in October
Stocks in the homebuilder sector were mixed but mostly higher Wednesday morning.
The
SPDR S&P Homebuilders
(XHB) - Get Report
, an exchange-traded fund that tracks the homebuilder sector, gained 0.8% while the
iShares Dow Jones US Home Construction
(ITB) - Get Report
ETF added 1%.
Among individual builders, Toll Brothers rose 0.3%,
PulteGroup
(PHM) - Get Report
1% and
Lennar
(LEN) - Get Report
1.6%.
D.R. Horton
(DHI) - Get Report
bucked the trend, losing 0.5% ahead of midday.
The
SPDR S&P 500
(SPY) - Get Report
ETF was just above the unchanged mark, gaining 0.1%. The
PowerShares QQQ Trust
(QQQQ)
gained 0.5%.
-- Written by Miriam Marcus Reimer in New York.
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