Mortgage bankers see home loan applications fall

Home mortgage applications fell again this past week, setting a new 13-year low, according to a report issued Wednesday by the Mortgage Bankers Association. The report noted that home buyers have not returned to the market since the federal tax credit for buying expired at the end of April.

Demand for home loans fell 5.7 percent in the week ended June 4 to the lowest level since February 1997, even after adjusting to account for the Memorial Day holiday.

Equally worrisome is the drop in the number of homeowners who are seeking to refinance, the report said.

"Purchase applications are now 35 percent below their level of four weeks ago, as home buyers have not yet returned to the market following the expiration of the home buyer tax credit at the end of April," said Michael Fratantoni, association vice president of research and economics.

"Although rates remained essentially flat, refinance applications dropped this past week for the first time in a month," he said. "Despite the historically low rates, many homeowners have already refinanced recently, remain underwater on their mortgages, have uncertain job situations, or have damaged credit following this downturn, and therefore may not qualify to refinance."

At the same time Wednesday, Federal Reserve chairman Ben Bernanke said that he doesn't see the U.S. economy slipping back into a recession. However, he told Congress in prepared remarks, the pace of the expansion - 3.5 percent this year by the Fed's estimate - won't be strong enough to quickly bring relief to the 15 million Americans who are unemployed. The unemployment rate now at 9.7 percent would likely see only a "slow reduction," Bernanke warned.

This story was supplemented with reports from The Associated Press.