Mortgage Applications Flat Lined

The  Mortgage Bankers Association reported that its index of mortgage applications rose only 0.2% for the week ended October 28. The purchase component of the index, which advanced 6.4% in the prior week, advanced 1.8%. The October average to date for the purchase index is up 0.2% versus the depressed September average. This result suggests subdued home sales over the next several months. Purchase applications have been flat over the past twelve weeks.  The contract rate on the 30-year fixed rate mortgage was off two basis points to 4.31%. Over the past three weeks, the 30-year contract mortgage rate has hardly changed.  We continue to note that housing’s prospects remain weak as the  fundamentals remain poor. Supply remains excessive while credit conditions remain tight.  Home sale prices continue to decline. Income growth remains soft.  And finally, consumer confidence remains depressed.
Bank of America Merrill Lynch   November 3, 2011