"There's nothing to gloat over," at BMO Capital Markets senior economist Sal Guatieri told Bloomberg. "The record low interest rates are a reflection of the times. The U.S. economy is fragile and the global economic headwinds remain brisk." A strict credit market, stubbornly high unemployment, Europe's debt crisis and concerns that the U.S. may fall into a double-dip recession all continue to weigh on the economy.
Data released Wednesday showed that mortgage loan application volume fell 4.3% last week from a week earlier, despite the low rates, the Mortgage Bankers Association said. Low rates did not even spur a great number of current homeowners to refinance; the refinance index tumbled 5.2% from the previous week, and the refinance share of all mortgage activity fell to 79.1%, from 79.7% in the previous week. The MBAA's purchase index fell 1.7% last week and remained 12.1% lower from the year-earlier week.
Certain loan customers may get better rates from credit unions than from banks, though banks tend to have an advantage when it comes to mortgage rates, charging a 3.32% APR on 60-month adjustable rate mortgages to the credit unions' 3.77%, according to RateWatch data as reported by MainStreet last month. (A comparison of the two institution types on fixed mortgages conducted in December found a statistical dead heat, though some experts argued that credit unions have an advantage in that they tend to charge lower fees.) But credit unions won on the other loan rates used in calculating the Credit Power Index, including personal unsecured loans (charging 10.49% to 12.54% at banks) and 36-month home equity loans (5.61% at credit unions, 6.75% at banks).
Stocks in the homebuilding sector were mostly higher Thursday, riding a general market rally. PulteGroup ( PHM) added 4.1%, D.R. Horton ( DHI) gained 1.7%, Toll Brothers ( TOL) rose 1.4% and Lennar ( LEN), largely considered a leader among the homebuilders, picked up 3.1%. Small-cap builder KB Home ( KBH) was higher by 3.5% while Hovnanian Enterprises ( HOV) bucked the trend, shedding 0.9%. The SPDR S&P Homebuilders ( XHB) and iShares Dow Jones US Home Construction, ( ITB) exchange-traded funds that track the sector remain around 70% and 80%, respectively, off their early 2006 peaks. -- Written by Miriam Marcus Reimer in New York. >To contact the writer of this article, click here: Miriam Reimer. >To follow the writer on Twitter, go to @miriamsmarket.
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