Low Rates Spur Refinancing, but Buyers Sidelined

Washington, DC, June 30, 2010–U.S. mortgage application volume hit an eight-month peak as lower loan rates spurred refinancing, according to the Mortgage Bankers Association.

However, demand to buy homes sank toward 13-year lows last week.

The U.S. housing market continued to deflate after a spring sales spree, fueled by now-expired federal tax credits of up to $8,000..

The upside is now limited by unemployment stuck near 10 percent, heavy foreclosure supply and pent-up selling from owners just waiting for the right time to put their homes back on the market.

Mortgage refinancing requests jumped 12.6% in the week ended June 25 to the highest level since May 2009, as average 30-year mortgage rates slid to 4.67%.

The 30-year loan rate flirted with the record low of 4.61% set in March 2009, while the 4.06% 15-year rate was an all-time lows.

Refinancing drove total mortgage applications up by 8.8% last week. Nearly 77% of all loan requests were for a refinancing, the highest share since April 2009.

Still, refi applications were about half the level seen in the spring of 2009.