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Purchase Volumes Fail to Lift March Mortgage Applications

After months of weak growth to start the year, mortgage application volumes sank in March as purchase numbers continue to struggle to find footing.

Compiling weekly survey results from the Mortgage Bankers Association (MBA), macroeconomic research firm Capital Economics calculated a 2.9 percent drop in total application volume in March following a meek 0.1 percent increase in February.

For just the week ending March 28, MBA reported a 1.2 percent decline in applications.

All of that decrease can be pinned on a 6.2 percent drop in refinance applications. Over the year, Capital Economics calculates remortgaging applications are down by 65.7 percent.

“The earlier remortgaging boom is well-and-truly a thing of the past, and a further gradual rise in mortgage interest rates over the next few years will ensure that remortgaging volumes remain subdued,” said property economist Paul Diggle.

On the home purchase side, applications came up an estimated 2.7 percent over March (1 percent in the final week) but remained down 16.8 percent year-over-year.

While the slight increase “was a step in the direction,” it’s not nearly enough to support a housing market that’s receiving less and less support from non-mortgaged buyers, Capital Economics says.

“Investment and cash buying is likely to soften now that housing is approaching fair value, and it will fall to mortgage-dependent buyers to take up the slack,” Diggle noted. “[I]t’s clear that the longer mortgage lending flat lines, the more precarious the housing recovery will look.”

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