Lower mortgage rates last week didn't entice home buyers to make a move or persuade home owners to refinance. The Mortgage Bankers Association reported Wednesday that total mortgage applications, including for home purchases and refinancings, dropped 4.1 percent on a seasonally adjusted basis last week. Some reports signal that a drop in consumer confidence is behind some of the recent sluggishness in the housing sector. A new report released by Fannie Mae showed a significant drop in the share of Americans who believe now is a good time to purchase a home. Nevertheless, borrowing costs have remained low. Mortgage rates have stayed below 4 percent for most of the year for conforming and jumbo loans. The average on a 30-year fixed-rate mortgage last week dropped to a 3.71 percent average from 3.73 percent the previous week. Mortgage application volume for home purchases was down 7 percent last week, its lowest level since January, MBA reports. Still, applications are 9 percent above last year. Applications for refinancing home loans dropped 2 percent last week. Mortgage lenders are predicting that refinance volume will continue to post drops next year, possibly by up to 40 percent, since forecasts call for mortgage rates to move higher. However, MBA's newly released 2017 forecast calls for purchase applications to rise 11 percent next year. Purchase applications are viewed as a gauge for future home-buying activity. "Strong household formation coupled with further job growth, rising wages, and continuing home-price appreciation will drive strong growth in purchase originations in the coming years," says Michael Fratantoni, MBA's chief economist.

Source: CNBC