WASHINGTON, D.C. (10/17/13)--The government shutdown could be having a chilling effect on would-be new homeowners, according to data compiled by the Mortgage Bankers Association.
The MBA's Market Composite Index, a measure of mortgage loan application volume, increased 0.3% for the week ending Oct. 11. But the Purchase Index decreased 4.8% on a week-to-week basis, with purchase applications 3% lower than they were at this time last year.
For the week ending Oct. 4, purchases were only down 0.7%. While the purchase index declined 5.6% as the shutdown loomed during the week ending Sept. 27, the index was up 6.6% and 2.5% the two weeks prior to that (Moody's Economy.com Oct 16).
MBA Vice President of Research and Economics Mike Fratantoni said that purchase applications for government programs are down by more than 7%--at their lowest level since December 2007--and that the government share of purchase applications is at its lowest level in three years.
Mortgage refinancing kept the market relatively active and the Market Composite Index up last week. The Refinance Index rose 3% from the previous week, with the refinancing share of total mortgage market activity increasing to 66%, up from 64%.
The MBA survey covers more than three-quarters of U.S. retail residential mortgage applications, and was started in March 1990.
MBA, based in Washington, D.C., represents the real estate finance industry, with a membership of over 2,200 companies.
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