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Mortgage activity slides amid continued rate drops

Slow mortgage activity shows few potential homebuyers are taking action.

Slow mortgage activity shows few potential homebuyers are taking action.

Low mortgage rates last week were enough to get many homeowners to refinance their mortgages, but apparently weren't low enough to generate increased relocation activity.

The Mortgage Bankers Association reports that after spiking last week as buyers worked to beat new Federal Housing Administration regulations, mortgage purchase applications fell off significantly during the week ending October 8 - dropping 8.3 percent.

While that number is skewed by the drop-off in FHA applications, the long-term trends still show reduced moving activity. Over the last four weeks, the number of purchase applications has slipped by 0.3 percent.

"Purchase activity remains generally weak," said Michael Fratantoni, MBA's vice president of research and economics. Although he added that applications are still near their post-tax credit highs.

Refinancing activity - which accounted for more than 83 percent of loans - jumped 21 percent compared to the previous week, as homeowners worked to take advantage of low interest rates.

Those rates have been on a continued slide over the past several weeks. According to data from Freddie Mac, the average interest rate for a 30-year fixed-rate loan last week was 4.27 percent - the lowest the company has ever recorded. Rates haven't been above 4.5 percent since August.