Home Purchase Applications At Lowest Level Since 2000

Refinances are booming as rates have dropped the past five weeks, defying expectations, but there's little demand for new home purchases. Too many people are unemployed or under-employed to be handle a mortgage or to move up in their home purchases.

Even with the extension of the $8,000 tax credit to buy a new home, new home purchases are declining.

The Los Angeles Times says:

Mortgage interest rates are at their lowest levels in five weeks, and not surprisingly more people are seeking home loans, two surveys from big industry players show.

But in an ominous sign for the housing market, the Mortgage Bankers Assn. said in a report today that the increase was driven by people refinancing homes, not buying them. Indeed, a seasonally adjusted index of home purchase applications was at its lowest level since 2000, the mortgage group said.

The closely watched Freddie Mac report on rates came out this morning, showing 30-year fixed home loans at an average of 4.91% this week for borrowers paying 0.7% in upfront points and fees to lenders.