Mortgage Applications Plunge As Rates Soar: MBA

[Purveyor]

Source: Reuters

NEW YORK (Reuters) - Mortgage applications plunged last week, largely reflecting a drop in demand for home refinancing loans as interest rates surged, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ended April 18 fell 14.2 percent to 637.6.

The U.S. housing market is currently suffering one of the worst downturns in its history. Last week's drop in demand may indicate what is in store for the hard-hit sector this spring, which traditionally is the peak of the home-buying season.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.04 percent, up 0.30 percentage point from the previous week.



Read more: http://www.reuters.com/article/businessNews/idUSNAT00395920080423?feedType=nl&feedName=usbeforethebell

[Bigmack]

1. Where are people going to live?

Ok... there was certain amount of "flipping" and speculation, but ultimately don't people need to live somewhere?

And do NOT tell me that grown kids are going to move back in with their parents! Nah...nah...nah....I can't hear you!!

[Warpy]

2. This is the worst part of it, the lag time between the foreclosures

coupled with evictions and the time lenders finally recognize that it's always better to keep a property occupied instead of neglected and/or vandalized.

[BonnieJW]

4. I think they're renting apartments until the market comes back.

My daughter and her husband own a moving business and they are very busy moving people out of houses and into apartments and into storage.

[NashVegas]

18. "Certain Amount"? I Think That Was the Bulk of It

I've seen periods in the (early) 1990s when banks would run mortgage specials with lower rates than usual, and people would literally camp out to have a place in line to speak with a lender.

Also through the 1990s, you'd see the occasional infomercial on overnight TV, pitching great rewards for real estate investment.

But there was never anything like what happened after the tech bubble burst and 9/11, when investors were looking for some place other than the stock market to put their money. There are television networks devoted to telling people how to make cosmetic changes to increase their real estate's value. There are shows like Flip This House devoted to it.

Until the great consolidation era, young married couples would decide where they wanted their children to go to school, and look for homes in those towns and neighborhoods where they planned on remaining for the lengths of their mortgages. On top of that, houses were often passed down from generation to the next, and only sold if no one in the younger generation didn't want to live there. After consolidation, we learned that it may not be the safest thing, to make such long term bets.

Bottom line: from 2001 on, more people bought real estate with no intention of using it as anything other than a profit generator than at any other time in history.

[PSPS]

3. This is nonsense

Mortgage applications plunged last week, largely reflecting a drop in demand for home refinancing loans as interest rates surged, an industry group said on Wednesday.

This is a trade association "catapulting the propaganda." A 0.3% increase in rates does not make a "surge."

The real reason applications are down is because there are no more "joke" no-doc "liar loans" anymore. You have to actually prove that your income is what you claim. Plus, the loan has to conform to traditional standards: about 28% mortgage payment-to-income and about 36% total debt payment-to-income ratios. Down payments must be in non-borrowed cash.

In other words, housing prices are still way over-inflated. They need to correst by another 30-50% to become affordable again. This PR press release is just the latest attempt by the "Mortgage Bankers Association" to stave off the inevitable and prop up the fraudulent value of the worthless loans on their books (that they can't already dump on the fed for a bailout.)

[liberal N proud]

14. It does in the propaganda world

[cstanleytech]

16. Think it will last as long as the one in Japan lasted?

Reason I ask is I read somewhere that there was such a prediction and if it came to pass that it might last as long as 12 to 15 years.

[sinkingfeeling]

5. "Rates Soar"???? I seem to remember rates for 30 yr. fixed at 13% & 14% in 1983 & '84.

I know this because my corporation made up the difference between an employee's old mortgage rate and a new one when the employee was relocated.

[Seeking Serenity]

6. Indeed. 30-yr fixed rates are 5.79% today.

A whopping 0.06% increase from last week, when they were 5.73%.

http://www.bankrate.com/

What are they talking about?

[madmax]

7. I remember that

It was financing your home thru the Mafia or a loan shark. I had bought my first home before the rates went thru the roof and I had 8% and thought I was 'lucky.'

[Supersedeas]

8. more finger pointing without historical comparison--where'd the real journalists go

[sinkingfeeling]

20. Well here's what HSH associates financial publishers' survey of lenders has as a history of rates:

http://www.hsh.com/mtghst.html

About our Statistics:
The statistical mortgage rate histories listed here are derived from HSH's database of 2,000 to 3,000 lenders -- the largest database available from any source.
HSH statistics come from the objective, editorial survey we've conducted for 20 years. Lenders do not pay to be included in our surveys -- never have, and never will.
The free statistics we offer include both conforming and jumbo loans; this gives an accurate view of the nation's overall mortgage market (particularly in high-cost areas). We also offer jumbo-only and conforming-only statistics -- ask for a price quote.
'Points' are not included in these free averages -- they are calculated separately, but not listed here (i.e., do not assume these stats represent "zero-point" loans). Other statistical series do list average points; please ask us for a price quote.
Read our Frequently Asked Questions about our statistics, too.

[whistle]

11. ...and in 1991 under Pappy Bush they hit 14.25% for 30 year fixed

[RiverStone]

9. Why the hell are rates going up when the fed has cut interest rates?

My GF qualified for a home loan 3 weeks ago, now she does not (because the rates went up).

[FloriTexan]

12. Lower rates are not passing on to consumers...

Hubby and I have been waiting patiently for rates to drop below 5.65 our current rate and a rate obtained in 2004 when rates were no where near as low as they are now. We're wanting to refi to get some cash out to make repairs on home and thought this would be a good time. In January they quoted a rate was 5.75 and the fed cut it 3 times since then. Despite the extra cuts, the same vendor now wants 6.00 and points to get there. My mortgage broker explained it this way, lenders have lost so much money that instead of trying passing along lower rates to consumers they are trying to increase them to make up their losses by actually raising the rates. I even called other lenders and got the same response. I'm really thankful we don't have to do anything now and we are more than happy to sit tight and wait them out or find another route. So much for the bail outs for the sub-prime mortgage companies. Ungrateful Bas turds. The government needs to just let them go broke.

[RiverStone]

15. Thanks for the explanation

I wonder if the CEO's of these lenders are losing sleep over it? :sarcasm:

In the end, the corporations are covering their own ass; so much for relief to the consumer.

[whistle]

13. Banking Cartel local and state charter banks must follow directions from

...Central Banks or go under. Remember there is no homeowner and bank foreclosure protection in place thanks to this spineless congress to stand up against Wall Street. The Fed rate drops were only for the Big Banks and Wall Street speculators and hedge fund people to use gambling money to sweep up the investment bargains so they could loot and steal yet more. We need trust busting bills enacted in Congress right now!

[littlecryinggirl]

19. The reason is

The fed drops short term rates that banks can borrow from. It really has nothing to do with long term mortgage rates. That said, it is common that retail rates, both short and long term, tend to follow the trend as money gets cheaper and competition kicks in. Lenders are free to set fixed rates at whatever they want as long as is it not usurious.

[whistle]

10. That's exactly what George H.W. Bush pulled in the final year of his one term

...presidency, and the "coo-coo nut" did not fall far from the trunk of the tree. The solution will be easy for Hillary, she'll just do what her husband Bill did on interest rates as soon as she takes office, ready to go with action plans in place along with millions of new good paying jobs so that working people can work their debts down and deal with long term economic solutions. It won't easy, but it sure will be light years beyond what Mc-Usury will offer with is 100 year wars in Iraq and Afghanistan and possibly Iran and God knows where else he and his fascist cronies want to take the country.

[littlecryinggirl]

17. That’s a great rate

I timed my refinance just about perfect and got 5.7 so how can anyone complain about 6.04? Thats a great rate.