US Mortgage Applications Continue to Fall as Rates Remain High
The weekly release of the MBA Mortgage Applications index showed new filings for loans decreased for the fourth consecutive time. The index dropped another 15.8% for the week ended June 12, following on the heels of a 7.2% decline in the previous week and two double-digit percentage drops prior to that. Applications for purchases snapped three weeks of advance with a contraction of 3.5% while refinancing tumbled sharply for the fourth week at 23.3%. Home owners have been more reluctant to refinance home loans as rates have seen a significant rebound in recent months as economic conditions improved and demand for Treasuries slowed. The benchmark 10-year note peaked at over four percent last Wednesday before closing at 3.945%. Since then, the yield has softened to 3.6588% as of Tuesday's close, the lowest since June 4. Consequently, mortgage rates remain high but have fallen slightly in the previous week. The 30-year fixed rate declined to 5.50% from 5.57% while the 15-year dipped to 4.99% from 5.10% in the prior week. The adjustable rate 1-year loan saw a large fall as well to 6.54% from 6.75%. Looking ahead, traders will be keen to watch stabilization in mortgage rates and improving applications as a sign of improvement in housing. Should the rates continue to rise alongside the 10-year Treasury bond yield, applications are likely to continue falling and lead to further risk in housing markets.