Mortgage requests fall most since Feb.
Mortgage applications fell last week by the most since February, defying efforts by President Obama’s administration to revive the housing market.
The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan dropped 19 percent to 444.8 in the week ended June 26, from 548.2 in the prior week. The group’s refinancing gauge declined 30 percent to the lowest in seven months, while the index of purchases fell 4.5 percent.
Unemployment, which touched a 26-year high in May, and rising borrowing costs discouraged homeowners from refinancing, while a growing number of foreclosures sidelined potential buyers waiting for house prices to stop tumbling.
Pending home sales showing contracts signed in May rose 0.1 percent, compared with a gain of 6.7 percent in April, the National Realtors Association said yesterday.
“The run-up in mortgage rates is exacting a toll in terms of depressing mortgage applications,’’ said Brian Bethune, chief US financial economist at IHS Global Insight in Lexington. “The economy is in a phase of attempting to find a bottom. Anything that comes in the way of that, like higher rates, is going to mean it takes longer.’’
Home loan rates climbed above 5 percent the week of May 29 for the first time in three months.
The percentage of people who said they plan to buy a home in the next six months fell to 2.7 percent in June, from 2.8 percent in May, the Conference Board said Tuesday.
At the current 30-year rate, monthly borrowing costs for each $100,000 of a loan would be $558, or about $62 less than the same week a year earlier, when the rate was 6.33 percent.
The average rate on a 15-year fixed mortgage dropped to 4.81 percent from 4.93 percent the prior week. The rate on a one-year adjustable mortgage decreased to 6.52 percent last week from 6.54 percent.
Still, rising foreclosures are flooding the market and depressing home values, said Lawrence Yun, chief economist of the Chicago-based Realtors’ group. This year, the number of foreclosures may rise to 2.5 million, the most on record, Yun said.
Existing home sales in May rose 2.4 percent to an annual rate of 4.77 million, lower than forecast, and the median price was down 16.8 percent from the same month in 2008, according to the realtors. It would take about 9.6 months to sell the nation’s 3.8 million unsold homes at the current sales pace.
“The worst is behind us but we’re a long ways off from a recovery in housing,’’ said Mark Vitner, a senior economist at Wachovia Corp.
About 20.4 million of 93 million US houses, condos and co-ops were worth less than their loans as of March 31, according to Zillow.com.
