US mortgage applications for home purchases dropped to a 13-and-a-half-year low last week, said Mortgage Bankers Association (MBA), a further sign of decline in the home loan market since the federal tax credit ended in April.
There have been concerns arising for months that the incentive was stealing future sales, which would result in a new mortgage crash once the support ended. Sales of new homes fell to a record low in May, while pending total sales sunk 30 percent from April.
According to MBA, home loan applications to purchase new homes were down 43 percent from last week. The woes come even when home loan rates hit near record low.
The rate declines have been lifting applications for mortgage refinancing, which hit a 14-month high two weeks ago. However, the MBA refinance reading tumbled 2.9 percent last week from the previous week, as the gauge for home purchases declined 3.1 percent.
In general, the application index of the MBA dropped 2.9 percent, adjusted for seasonal factors and the Independence Day celebration. The MBA survey covers over 50 percent of the US retail residential mortgage applications.
Additionally, the average 30-year fixed-rate mortgages rose 4.69 percent from 4.68 percent, while the 15-year fixed-rate mortgages were 4.12 percent, up from 4.11 percent.