Government Shutdown Chilled Purchase Mortgage Market: MBA
The government shutdown apparently made a number of potential new home buyers decide to put off their purchases, according to the Mortgage Bankers Association.
The Association reported that mortgage applications were up 0.3% for the week ending October 11, but that the numbers of applications to finance a new house had dropped by 0.5%.
“The government shutdown had a notable impact on the mortgage market last week. Purchase applications for government programs dropped by more than 7% over the week to their lowest level since December 2007, and the government share of purchase applications dropped to its lowest level in almost three years,” remarked Mike Fratantoni, MBA’s Vice President of Research and Economics.“Conventional purchase applications dropped as well, but not to the same extent, falling almost 4 percent for the week.”
The refinance share of mortgage activity increased to 66%of total applications from 64% the previous week, the association reported. The adjustable-rate mortgage (ARM) share of activity decreased to 6% of total applications.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less)grew to 4.46% from 4.42%, with points decreasing to 0.31 from 0.44 (including the origination fee) for 80% loan-to-value ratio loans, the MBA added.