The mortgage market seems to be entering the summer doldrums a bit earlier than usual, according to Keith Gumbinger, an analyst with HSH Associates, a research company in Butler, N.J.

"The pattern is usually that things slow up around the Fourth of July and stay slow until Labor Day, " he said.

Mr. Gumbinger says the market continues to be dominated by fixed-rate loans even though adjustables are growing. "There's been heavy marketing by vendors of adjustables," he said, "and the ones offering the lower starting rates appear to be doing well. But long-term fixed rates are still near their 15- or 16-year lows."

David Lereach, chief economist for the Mortgage Bankers Association of America, agrees that fixed rates are still dominant. But he addes that adjustable-rate loans are climbing fast. "I'm looking at 30% of loans as ARMs, up from 20% just a few months ago," he said.

Sharp Drop in Refi Applications

The association reported last week that applications for refinancings dropped about 17% from the level a week earlier to an index of 133.7, an unusually sharp drop that was partly attributed to the Memorial Day holiday. The index was the lowest since the first week of January 1993.

The association also reported that the dollar volume of applications had fallen 46.2% from the figure a year ago.

Interest rates are certainly a factor. Mr. Lereah's projections indicate some 200,000 home-buyers have been priced out of the market by the rise of 1.3 percentage points in mortgage rates since early February.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.