Posted on 11 Feb 2009
The Mortgage Bankers Association said on Wednesday that demand for U.S. mortgage applications tumbled nearly 25 percent last week, with requests for loans to buy homes sinking to an eight-year low as potential buyers hold out for better terms and government help.
The Mortgage Bankers Association's seasonally adjusted home purchase applications index slid 9.8 percent in the week ended Feb. 6 to 235.9, its lowest level since the end of 2000. Average 30-year mortgage rates slipped to 5.19 percent from 5.28 percent a week earlier, the trade group said.
The rate has fallen more than a full percentage point in three months, but is up about 3/8 point from early this year and seen heading lower.
"In addition to waiting for the rate, you have home prices continuing to come down, so why would I pay $200,000 today when I can pay maybe $180,000 in a couple months or even $150,000," Daniel Penrod, industry analyst for the California Credit Union League in Rancho Cucamonga, California, said on Tuesday.
The government is "really pushing against some very strong forces."
U.S. Treasury chief Timothy Geithner on Tuesday proposed pumping $2 trillion into the banking system to sop up bad assets, restore credit and revive lending at lower mortgage rates.
Expectations that government steps could yank 30-year home loan rates near 4 percent, a proposed $15,000 home-buying tax credit and the outlook for still lower house prices has raised the incentive to wait.