Purchase activity declines again

The number of people seeking mortgages for their relocation to a new home slipped again last week.

The Mortgage Bankers Association reported that purchase application volume decreased 6.7 percent for the week ending October 15. As a whole, mortgage activity dipped 10.5 percent from the previous week, with refinancing leading the way with a 11.2 percent drop.

Declining mortgage activity may have come as mortgage rates retreated from record lows they established last week. The MBA reported that the average interest rate on a 30-year fixed-rate mortgage increased to 4.34 percent, up from 4.21 percent the previous week. Likewise, rates on 15-year fixed-rate loans climbed from 3.62 percent to 3.71 percent.

On the other hand, record-low rates did little to convince many buyers to pack their moving boxes the week before, when purchase activity declined 8.5 percent.

Depressed moving activity could be the result of tightening lending standards. Mark Vitner, senior economist at Wells Fargo Securities in Charlotte, North Carolina, told Reuters that some buyers are having trouble qualifying for mortgages because banks are restricting credit. "Low credit scores and high unemployment are also playing a big role," he told the news source, adding that many families today are also struggling with mortgages that are worth more than the value of their home.

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