Mortgage applications lowest since 1996

Despite historically low mortgage rates and plummeting home prices, potential homebuyers are not snatching up the properties in their local neighborhoods. When mortgage rates recently fell significantly, some homeowners were able to take advantage of the low numbers and refinance their mortgages.

Many, however, were not able to qualify for refinancing, and similarly, numbers of homebuyers are not qualifying for loans from mortgage lenders due to tighter credit standards required.

The most recent mortgage applications index from the Mortgage Bankers Association found mortgage application activity fell 2.4 percent in the week ending in August 19. Loan requests for home purchases dropped 5.7 percent, the lowest level since December of 1996, according to the MBA. Applications for refinancing also decreased 1.7 percent when interest rates increased slightly.

"Another week of volatile markets and rampant uncertainty regarding the economy kept prospective homebuyers on the sidelines, with purchase applications falling to a 15-year low," said Mike Fratantoni, MBA's vice president of research and economics.

The Boston Globe, however, recently reported that single-family home sales in Massachusetts rose 7 percent in July compared to the year before. This was the first month of year-over-year gains in the state since January. Median home prices in July dropped to $317,500 from $320,000 in 2010, but it was the third month in a row that median prices stayed above $300,000. 

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