Posted by Joseph Y. Calhoun, III

Mortgage applications fall:

WASHINGTON, D.C. (July 1, 2009) — The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending June 26, 2009.  The Market Composite Index, a measure of mortgage loan application volume, was 444.8, a decrease of 18.9 percent on a seasonally adjusted basis from 548.2 one week earlier.  On an unadjusted basis, the Index decreased 18.5 percent compared with the previous week and decreased 7.4 percent compared with the same week one year earlier.

The Refinance Index decreased 30.0 percent to 1482.2 from 2116.3 the previous week and the seasonally adjusted Purchase Index decreased 4.5 percent to 267.7 from 280.3 one week earlier.  The Refinance Index is at its lowest level since November 2008.

Higher interest rates and rising unemployment are obviously having an effect. I don’t think the refinance numbers are surprising at all. Not only have rates risen, but fewer people are able to refinance because they don’t have the necessary equity. I don’t think it makes that much difference to the economy though. Most recent refinancing do not include any cash out of the deal so the effect on spending is nil. The purchase application numbers are worrying though. There is still a lot of excess inventory to work off before the housing market is back to “normal”.