Mortgage Applications Drop Again
Mortgage applications fall
Mortgage applications dropped again this week, down the third week in a row, here are some snippets from the article:
"The Mortgage Bankers Association said its index of mortgage application activity for the week ended October 7 slid 2.6 percent to 694.8 -- its lowest level since mid-April."
"The MBA's purchase mortgage index fell 0.9 percent to 469.5 from prior week's 473.8. The index, considered a timely gauge on U.S. home sales, declined for a fourth consecutive week to its lowest level since May 27."
"The ARM share of activity decreased to 29.5 percent of total applications last week from 29.8 percent the previous week. ARM demand reached a 2005 high of 36.6 percent in late March."
The last quote gave me the shivers, over a quarter of all mortgage applications right now are adjustable rate mortgages. With all the fed talk of pushing short term rates lately, the bond yields have been moving upwards (Greenspans conundrum), and it's only a matter of time before the squeeze forces mortgage rates upwards. I believe we'll see at least a quarter point hike at the next 3 meetings chaired by Mr. Greenspan.
With home prices at stratospheric levels, rate hikes long into the future (I believe we'll see 7% 30yr rates next year), and much tighter bankrupcy laws, it's a wonder why anyone would put themselves into a position like this.
As far as the drop in activity, the measure is nationwide, so take it with a grain of salt, however, it does match with the drop in sales activity many of us have been seeing lately (this is beyond the typical fall/winter decline).
-grim
Mortgage applications dropped again this week, down the third week in a row, here are some snippets from the article:
"The Mortgage Bankers Association said its index of mortgage application activity for the week ended October 7 slid 2.6 percent to 694.8 -- its lowest level since mid-April."
"The MBA's purchase mortgage index fell 0.9 percent to 469.5 from prior week's 473.8. The index, considered a timely gauge on U.S. home sales, declined for a fourth consecutive week to its lowest level since May 27."
"The ARM share of activity decreased to 29.5 percent of total applications last week from 29.8 percent the previous week. ARM demand reached a 2005 high of 36.6 percent in late March."
The last quote gave me the shivers, over a quarter of all mortgage applications right now are adjustable rate mortgages. With all the fed talk of pushing short term rates lately, the bond yields have been moving upwards (Greenspans conundrum), and it's only a matter of time before the squeeze forces mortgage rates upwards. I believe we'll see at least a quarter point hike at the next 3 meetings chaired by Mr. Greenspan.
With home prices at stratospheric levels, rate hikes long into the future (I believe we'll see 7% 30yr rates next year), and much tighter bankrupcy laws, it's a wonder why anyone would put themselves into a position like this.
As far as the drop in activity, the measure is nationwide, so take it with a grain of salt, however, it does match with the drop in sales activity many of us have been seeing lately (this is beyond the typical fall/winter decline).
-grim
12 Comments:
Interest Rates: Still a Way to Go
"We believe September's inflation reports should confirm that trend, giving further ammunition to the Federal Reserve to continue its current tightening trajectory. We look for the Fed to raise rates by 25 basis points at its next three policy meetings, bringing the Fed funds target rate to 4.50% by the end of January."
grim
Natural Gas Prices
"AGA's member utilities predict average natural gas bills for their customers will be 30-40 percent higher this winter compared with last year, much lower than the federal government's estimate of a 50-70 percent increase, the trade group said."
"Nonetheless, Roger Cooper, AGA's executive vice president for policy and planning, said: "I would look for gas bills going up 50 percent this winter.""
I'm seeing stories all over the wires about Nat. Gas providers informing customers of the upcoming spike in utilities prices. For new homeowners in their new McMansions, winter utility bills are going to be a big shock. If consumers keep spending at their current rates, these increases will further erode savings in the upcoming months. I wonder if we're going to hit a new personal savings rate low come Jan/Feb.
jb
Pascack Valley,
Yes, I saw it deleted under Bergen County. They said I was spamming, and maybe I was, but I think they just used that as an excuse to delete my post. I'm tempted to start posting copies of all my stories to that forum on nj.com.
I'm sure there is a big realtor presense on nj.com, I'm sure they make quite a bit of money from their real estate advertising (heck, the google ads on the first page of my site routinely links to NJ.COM real estate).
-grim
Another natural gas article, all over the wires the past couple of days. With so many people concerned about oil and gas, seems that the huge spike in natural gas has been off the radar of most people..
Winter Heating Bills
Let's hope this winter isn't particularly cold (with the recent cold snap lately, my guess is that we're headed for a particularly cold winter). Any meteorologists out there with predictions for this winter?
This really hits the pocketbook hard, an almost entirely unexpected expense at the same time as the x-mas spending spree (everyone notice how early x-mas decorations were put up this year? It's not a coincidence that retailers are pushing for early spending this year; they know they've got to compete with some large bills (heating, electric, gasoline, increased costs due to inflation).
grim
For whatever it's worth, there is a note in today's Bergen Record that they are going to start a series this Sunday on Northern NJ Real Estate: bubble or boom?
Might be some interesting reading.
Thanks for the great blog.
imagne these wantabee fools seeing houses intheir neighborhood 30% less and condos 50% less.
It surely will be a nightmare for many folks. Many manymany sleepless nights ahead for alot of homeowners as the property taxes hit., the utility bills hit the credit card bills hit the gas bills hit and finally the death blow the readjusted ARMs Interest only loans go up.
No more wiggle room
The housing market is blowing up.
This crash is for you greedy realtors, builders, mtg brokers
HAHAHAHAHAHAHAHAHA
More "risky lending" warnings..
Bies warns on risky lending practices
There have been some significant changes in psychology over the past few days. There is now solid acknowledgement that the rise in housing prices is largely do to speculation. Also is the acknowledgement that the potential for significant price drops exist, and that those drops may potentially cause solvency issues for both lenders and homeowners.
""From the point of view of bank supervisors, affordability products do not necessarily pose solvency concerns," she said, adding that most homeowners had "a significant" equity cushion."
I would argue that most speculators (i.e. people that bought in the past 3-4 years), do not have any significant equity cushion, thus do pose a solvency concern. Those who bought 20 years ago and hold no mortgage will obviously, not be affected.
"Bies also said banks were generally well-capitalized, "which means that (home) prices could fall significantly without leading to a significant number of bank failures.""
I interpret her message to mean that should home prices fall significantly, there would still be a number of bank failures do to it, however it wouldn't necessarily be significant. That's really a judgement call, what number of bank failures is significant, what number is A-Ok?
-grim
Mtg tax deduction reduced.
This will kick the housing market in the gut.
That's all folks!
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