The number of customers applying for a mortgage to purchase a property fell to the lowest level in 13 years last week, a sign the housing market is struggling without government incentives.
Purchase volume declined 5.7 percent and is at its lowest point since February 1997, the Mortgage Bankers Association said Wednesday.
Overall mortgage application volume, which includes loans for purchases and refinancings, dropped by 12.2 percent during the week ending June 4, compared with the previous week. Refinance volume tumbled 14.3 percent.
"Purchase applications are now 35 percent below their level of four weeks ago, as homebuyers have not yet returned to the market following the expiration of the homebuyer tax credit at the end of April," said Michael Fratantoni, MBA's vice president of research and economics.
New buyers were offered a credit worth up to $8,000, while current owners who bought and moved into another home could get one for up to $6,500. To receive them, buyers had to have a signed offer by April 30 and must close by the end of June.
The trade group said customers looking to refinance homes accounted for 72.2 percent of all applications, compared with 73.8 percent the previous week. This marks the first decline in refinance share in five weeks.
Interest rates have hovered near historical lows for the past month and many homeowners have already refinanced recently. Others can't qualify because they owe more than their homes are worth, lack job security or have tarnished credit, Fratantoni said.
The average interest rate on a 30-year, fixed-rate mortgage fell to 4.81 percent last week from 4.83 percent a week earlier.
The average rate for a 15-year, fixed-rate mortgage — which is often more popular for refinancing a mortgage — rose to 4.26 percent from 4.24 percent.
The survey provides a snapshot of mortgage lending activity among mortgage bankers, commercial banks and thrifts. It covers more than 50 percent of all residential retail mortgage originations each week.