US mortgage applications dropped 5.1 percent, attributed to a decline in refinancing even as borrowing costs fell, according to a Bloomberg report.
The Mortgage Bankers Association’s index showed that mortgage applications declined for the fourth straight week, while the refinancing measure fell 6.2 percent and purchase gauge plummeted 2.6 percent.
This was mainly attributed to a tight credit landscape and smaller job gains, which prevent consumers from entering the housing market, hindering a sustained recovery. Concurrently, a surplus of distressed properties driving prices down is making it harder for home owners to refinance their mortgages.
“Without stronger job growth it’s not possible for consumers to purchase more homes,” said Celia Chen, a housing economist at Moody’s Analytics Inc in the report.
“The other thing constraining the housing market is that there’s not much financing available for buyers unless they have excellent credit. Many folks who would want to buy a house just can’t get a loan to do that.”
The number of applicants looking to refinance a loan dropped to 65.6 percent last week, from 66.4 percent in the previous week.
In addition, the average rate for 30-year fixed mortgages declined to 4.55 percent from 4.69 percent, while 15-year fixed-rate mortgages dropped to 3.68 percent from 3.79 percent.
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