Even though mortgage interest rates have beeen greatly reduced over the last few months, First Fidelity analysts believe that they have not fallen by enough to stabilize the housing market. Most of the activity in the mortgage business has been not in new purchases but on refinancings as most existing home owners have run to the banks to refinance their existing home loans.
For the four weeks ending May 15, the mortgage applications for the new home purchases were down 4.4%. Even though average mortgage interest rates are down over 1.2 percentage points from a year ago period, applications are down almost 30% year-over-year because of rise in unemployment and a drop in employment income.
