The low rates were not enough to boost mortgage volumes: applications to refinance a loan fell a seasonally adjusted 3 percent on the week, and are down nearly 57 percent on the year, according to the mortgage bankers survey. Applications to purchase a home—a closely watched indicator of the housing recovery—fell 4 percent on the week and are 17 percent below year-ago volumes. This does not bode well for home sales as the market moves from the traditionally robust spring season to the slower summer months.
“The lack of movement on mortgage applications even with a significant drop in rates confirms what we have seen for much of the past five years. Namely, that lower rates alone are not enough to generate home purchase activity,” said Guy Cecala of Inside Mortgage Finance. “Home prices, mortgage underwriting, employment, and a basic belief that it is a good time to buy home are major factors that seem to influence home buying more than rates.” Here is a direct video link.