By Mark Huffman
ConsumerAffairs.com
February 13, 2008
With interest rates falling, you might think banks would be writing lots of mortgages. But so far, the trend is in the other direction, according to the Mortgage Bankers Association.
In its Weekly Mortgage Applications Survey for the week ending February 8, 2008, the industry group reports a decrease in loan activity of 2.1 percent on a seasonally adjusted basis from 1086.6 one week earlier.
Not only were lenders not writing new mortgages, they weren't doing very many refinancing loans either. The MBA's Refinance Index decreased 3.0 percent from the previous week and the seasonally adjusted Purchase Index decreased 0.3 percent from one week earlier.
Consumers are finding it more difficult to qualify for loans, as banks have tightened their lending requirements. Even homeowners with good credit and now finding it difficult to refinance their adjustable rate mortgages because, in many cases, the value of their homes have leveled off, or even declined.
Consumers who can qualify for loans are paying an average contract interest rate for 30-year fixed-rate mortgages of 5.72 percent, up from 5.61 percent, with points increasing to 1.15 from 0.98 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 5.18 percent from 5.09 percent, with points increasing to 1.08 from 0.92 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs increased to 5.72 percent from 5.62 percent, with points decreasing to 0.90 from 0.97 (including the origination fee) for 80 percent LTV loans.