Mortgage Apps: Purchase Application Trend Concerning

Bottom Line: Despite a slight drop in 30-year mortgage rates last week, mortgage purchase applications fell again. The 4-week average is now at the lowest levels since early November. On a longer-term trend basis the trend in purchase applications is still mixed -- but the momentum is now sharply to the downside and bears watching as an indication of further weakening in the housing market. Applications for refinancing remain extremely muted, as they have for nearly two years now. The MBA Mortgage Applications Index FELL by 1.7% during the week ended August 24 to 344.0, modestly below its 13 week average of 359.4 and 15.5% BELOW its year ago level. The Purchase Index FELL by 0.9% to 230.1, modestly below its 13 week average of 243.4 but 2.7% ABOVE its year ago level. The Refinance Index FELL by 3.0% to 953. With this decline, refinancing activity is modestly below its 13 week average of 981 and 33.4% BELOW its year ago level. Contract Mortgage Rates FELL with the 30-year fixed rate declining by 3 bps to 4.78% and with the 15-year fixed rate declining by 1 bp to 4.24%.