NEW YORK - Mortgage applications for home loan refinancing fell for a second straight week, dropping to its lowest level since early August, as rock-bottom interest rates failed to boost demand.
While historically low mortgage rates have been a glimmer of hope for a housing market that has struggled to find footing in the absence of government support, it failed to foster demand for loans to purchase a home last week.
The Mortgage Bankers Association on Wednesday said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended September 10 decreased 8.9 percent.storiesThe four-week moving average of mortgage applications, which smooths the volatile weekly figures, was down 0.8 percent.
The MBA's seasonally adjusted index of refinancing applications decreased 10.8 percent, reaching its lowest level since the week ended August 6.
Home loan refinancing puts extra cash into consumers' hands that they can save, use to pay off existing debt or funnel into the economy through extra spending.
Torsten Slok, senior economist at Deutsche Bank in New York, said "underwater" mortgages — where the amount owed on the mortgage exceeds the value of the home — are one of the biggest banes of the homeowners.
This negative equity makes many of them unqualified for home loan refinancing and prevents some from selling.