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Mortgage Applications Plunge to Near Seven-Month Low

 
Anonymous Coward
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06/17/2009 11:04 PM
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Mortgage Applications Plunge to Near Seven-Month Low
[link to www.foxbusiness.com]

NEW YORK--U.S. mortgage applications fell for a fourth consecutive week, with overall demand plunging to its lowest level in nearly seven months, data from an industry group showed on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended June 12 decreased 15.8% to 514.4, the lowest since the week ended November 21, 2008.

A rise in mortgage rates in recent weeks had sapped demand, particularly for home loan refinancing, but the direction of rates reversed course last week.

Cameron Findlay, chief economist at LendingTree.com based in Charlotte, North Carolina, said borrowers who are considering refinancing their current mortgage are now reevaluating their decision, given the swift and sharp rise in mortgage rates over the past few weeks.

"When rates move in volatile swings like this, it is critical (that) borrowers look for competitive rates -- competition in this environment keeps mortgage companies honest," he said.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.50%, down 0.07 percentage point from the previous week, but significantly higher than the all-time low of 4.61% set in the week ended March 27. The survey has been conducted weekly since 1990.

Interest rates, however, were well below year-ago levels of 6.57%.

Thirty-year mortgage rates had mostly been on a downward trend since the Fed unveiled its plan to buy mortgage-backed debt in late November. But the Fed has recently met resistance in the bond market.

Treasury yields, which are linked to mortgage rates, rose sharply earlier this month, with mortgage rates responding in kind. Treasury yields have come down recently, allowing rates to fall.

The plunge in demand for home loans may help gauge how the hard-hit U.S. housing market is faring this spring, the peak home buying season.

The MBA's seasonally adjusted purchase index fell 3.5% to 261.2.

The four-week moving average of mortgage applications, which smoothes the volatile weekly figures, was down 13.5%.

WEEKLY REFINANCING ACTIVITY PLUNGES

The U.S. housing market is in the worst downturn since the Great Depression and its impact has rippled through the recession-hit economy, as well as the rest of the world. Economists contend that the economy might not emerge from its slump unless the housing market stabilizes.

The Mortgage Bankers seasonally adjusted index of refinancing applications decreased 23.3% to 1,998.1, also the lowest since the week ended November 21, 2008.

Kevin Walker, CEO of MortgageReport.com in Newton, Massachusetts, a new resource for homeowners, said the impact of higher interest rates on mortgages is moderate because a large number of consumers did refinance over the past several months, and therefore most holders of conforming mortgages took advantage of low rates.

However, many holders of non-conforming loans, might not have been able to refinance and those borrowers with adjustable-rate mortgages might now be sweating it out because their impending re-set dates are approaching just as rates are trending higher, he said.

"So it's a mixed bag: positive for those who did lock in low rates, but still unsettling for many millions of additional mortgage holders," he said.

The refinance share of applications decreased to 54.1% from 59.4% the previous week. The adjustable-rate mortgage share of activity increased to 4.3% in the latest week, up from 3.4% the previous week.

Fixed 15-year mortgage rates averaged 4.99%, down from 5.10% the previous week. Rates on one-year ARMs decreased to 6.54% from 6.75% the prior week.
Anonymous Coward
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06/17/2009 11:35 PM
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Re: Mortgage Applications Plunge to Near Seven-Month Low
Thanks for this article OP.

Interesting that mortgage aps have been going down for 4 weeks cuz it's 1) height of selling/buying season and

2) rates were darn good til last week.

Also, 7 months ago is Nov. or so, traditionally worst sales of the year.

Very wierd that Nov. and June are similar in terms of mortgage aps.

VERY GOOD news for those of us who are waiting patiently for this damn RE bubble to burst completely!
Mortis Ages
User ID: 703913
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06/17/2009 11:55 PM
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Re: Mortgage Applications Plunge to Near Seven-Month Low
Thanks for this article OP.

Interesting that mortgage aps have been going down for 4 weeks cuz it's 1) height of selling/buying season and

2) rates were darn good til last week.

Also, 7 months ago is Nov. or so, traditionally worst sales of the year.

Very wierd that Nov. and June are similar in terms of mortgage aps.

VERY GOOD news for those of us who are waiting patiently for this damn RE bubble to burst completely!
 Quoting: Anonymous Coward 705240
Anonymous Coward
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06/18/2009 12:00 AM
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Re: Mortgage Applications Plunge to Near Seven-Month Low
are those number per day, wtf does 500+ mean?
Anonymous Coward
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06/18/2009 12:37 AM
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Re: Mortgage Applications Plunge to Near Seven-Month Low
are those number per day, wtf does 500+ mean?
 Quoting: Anonymous Coward 672702


hmmm...don't know what that 515 means. Be great if it was the grand total of all US mortgage aps for the week tho. yuck yuck yuck
Mortis Ages
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06/18/2009 12:51 AM
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Re: Mortgage Applications Plunge to Near Seven-Month Low
are those number per day, wtf does 500+ mean?


hmmm...don't know what that 515 means. Be great if it was the grand total of all US mortgage aps for the week tho. yuck yuck yuck
 Quoting: Anonymous Coward 705240



This is an aplication Index, as all index they compare itself to a specific point in time and arbitrarily start it at 100.

So for all practicle purposes they were 515% more applications last week that in 1993, (100.00)

But to get things in perpective 2005 the applications were running at 2800 or 2,800% of the baseline.

Hope that helps.

Martis Ages

Mort is for ages
(Mort engage) or
engange in death.
Anonymous Coward
User ID: 672702
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06/18/2009 12:55 AM
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Re: Mortgage Applications Plunge to Near Seven-Month Low
are those number per day, wtf does 500+ mean?


hmmm...don't know what that 515 means. Be great if it was the grand total of all US mortgage aps for the week tho. yuck yuck yuck



This is an aplication Index, as all index they compare itself to a specific point in time and arbitrarily start it at 100.

So for all practicle purposes they were 515% more applications last week that in 1993, (100.00)

But to get things in perpective 2005 the applications were running at 2800 or 2,800% of the baseline.

Hope that helps.

Martis Ages

Mort is for ages
(Mort engage) or
engange in death.
 Quoting: Mortis Ages 703913



thanks always wondered what the base yr
Mortis Ages
User ID: 703913
United States
06/18/2009 01:04 AM
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Re: Mortgage Applications Plunge to Near Seven-Month Low
Base period and value for all indexes is March 16, 1990=100.


Here is the true base line, it never went up much until 1993. In 2007 it was in the 2,500 's! That is a hot rate, unsustainable.





GLP