U.S. mortgage applications dipped last week, reflecting reduced demand for home purchase loans even as rates on 30-year loans fell to their lowest since December, an industry group said on Wednesday. The Mortgage Bankers Association's (MBA) seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, decreased 1.2 percent for the week ended February 5.
A continuation of lackluster demand for home purchase loans would not bode well for the U.S. housing market, which remains highly vulnerable to setbacks and heavily reliant on government intervention.
The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was up 3.8 percent.
With the four week average up and the inventory of homes for sale declining, one would think prices would be on the rise. But Celia Chen, senior director of housing economics at Moody's Economy.com in West Chester, Pennsylvania, said "Home prices will fall, probably until the end of the year," Chen said. "The large pipeline of distressed properties that may turn into foreclosure sales weigh down the home price outlook."
"There is a great deal of uncertainty over how many properties will end up on the market as a foreclosure sale, however," she said.
The housing market faces plenty of obstacles ahead and we will keep you posted on early signs of changes.
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Edited by Paul Nelson
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