Loan applications slow despite interest rate decline

_This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts._ A reduction in average mortgage rates last week didn’t stop

the decline in applications for home loans, the Mortgage Bankers Assn. reported this morning. The refinance boom continued to fizzle out, with applications down 30% from the previous week,

to the lowest level since November. Purchase applications fell by 4.5%, according to the report, which you can read at the website below.

http://www.mbaa.org/NewsandMedia/PressCenter/69498.htm The average contract interest rate for 30-year fixed-rate home loans decreased to 5.34% from 5.44% a week earlier. For 15-year fixed

loans, the rate averaged 4.81%, down from 4.93%. Points, including the origination fee, edged up to just over 1% of the loan amount from just a hair under 1%, the trade group said. The

30-year fixed rate bottomed out at 4.61% at the end of March, the lowest level since the Mortgage Bankers Assn. started keeping track in 1990. Many economists believe the economy overall may

shift back into growth mode later this year. But despite some encouraging signs, a solid recovery in housing is likely to take much longer. That is in part because of the rate trends,

Federal Reserve Bank of San Francisco President Janet Yellen said in a speech Tuesday. ‘Even though house prices are continuing to fall in most markets, housing sales and new construction

appear to have stabilized,’ Yellen said in her speech, posted online at http://www.frbsf.org/news/speeches/2009/0630.html But she added: ‘I am concerned that mortgage rates, which have risen

of late, could place a drag on a still very sick housing market, potentially driving home prices still lower and pushing more borrowers into foreclosure.’ — E. Scott Reckard