Low Rates = Fewer Mortgage Apps?

With rates still low, why are mortgage applications falling?

Here's the short answer: The unemployment rate, which isn't falling.

Despite the extension of the government's special tax credit for new home buyers, and the fact that interest rates on 30 year fixed-rate mortgages remain at rock bottom (averaging 5.02 percent last week vs. 5 percent a week earlier), applications for all home loans actually fell last week by almost 11 percent, according to the Mortgage Bankers Association.

Refinancings have been especially hard hit. While loans for buying a new home, adjusted for seasonal variables, were down 3.3% from the prior week, applications for refinancing existing mortgages plummeted slightly more than 15%.