Mortgage application volume falls

Moving activity may have petered off slightly for the week ending September 10, as evidenced by fading mortgage application volume.

Fewer people sought a mortgage in order to finance the purchase of a home last week, reported the Mortgage Bankers Association. Their Purchase Index slid 0.4 percent on a seasonally adjusted basis, although when not adjusted that drop was even steeper - down 21.9 percent. Purchase applications were 39.7 percent lower compared to the same week a year ago.

Refinancing activity likewise took a dip, as applications decreased 10.8 percent from the previous week. Refinancing made up 80.5 percent of all mortgage activity, down from 81.9 percent the week before.

Negative equity is a primary factor to decreased home loan demand, Torsten Slok, senior economist at Deutsche Bank, told Reuters. Because so many homeowners are "underwater," holding mortgages that are worth more than the value of their home, few can afford selling their home and moving to a new one. Others can't relocate because they don't have the adequate credit to qualify for a mortgage, he said.

Low credit can be a burden to many relocating families, especially given today favorable homebuying climate. Home prices around the nation remained flat in August, according to CoreLogic, indicating that affordable homes would be within the reach of many families that are moving.
 

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