Wednesday, February 15, 2006

Mortgage Rates Up, Applications Down

MBA: Mortgage applications down last week

Index measuring home loan activity drops to its lowest level in two years, industry group says; third consecutive weekly decline.

Mortgage applications fell for a third consecutive week as demand for loans to purchase homes dropped to its lowest level in more than two years, an industry trade group said Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended Feb. 10 decreased to 574.1, down 7.3 percent from the previous week's 619.3.

The MBA's seasonally adjusted purchase mortgage index, which is considered a timely gauge on home sales, fell 7.9 percent to 391.7 from the previous week's 425.1, its lowest level since the week ended Dec. 26, 2003, when it hit 390.1.

...

The 30-year fixed-rate mortgage, the industry benchmark, is substantially above its 2005 low of 5.47 percent in late June of 2005, but hovering below its 6.33 percent high in the week of Nov. 11, 2005.

Fixed 15-year mortgage rates averaged 5.92 percent, up from 5.84 percent the previous week. Rates on one-year adjustable-rate mortgages (ARMs) increased to 5.52 from 5.48 percent, further narrowing the distance between rates on the ARMs and the fixed-rate mortgage loan.


(emphasis added)

Caveat Emptor,
Grim

11 Comments:

Blogger grim said...

All eyes and ears will be on Bernanke this afternoon.

Bernanke, in Testimony, May Resist What's Popular in Congress

Bernanke, who appears before Congress for the first time since replacing Alan Greenspan as chairman on Feb. 1, will give investors a chance to form a first impression of his ability to steer the world's largest economy, build consensus among policy makers and politicians and manage financial crises.

grim

2/15/2006 08:31:00 AM  
Anonymous Anonymous said...

I found this article yesterday while searching for mortgage rates...
http://www.bankrate.com/brm/news/real-estate/20060208a1.asp

And thought this section was interesting as it contradicted what was on this board last week under "Lowballing"

"A lot of buyers think that 'If I call the listing agent, I'll get a better deal.' That's not true," said Bob Wilson, an agent with the Guiltinan Group in San Diego County. Because listing agents have a duty to get the best possible price for the seller, they're not suitable advisers for crafting a lowball offer.

Buyers need someone to represent their interests. Typically, that person is a buyer's agent, who researches listings exclusively for a home seeker. When a purchase closes, the buyer's agent normally splits the sales commission with the seller's Realtor. In most states the buyer's agent is required to deal with the seller honestly but, unlike the listing agent, is under no obligation to get the highest possible price for the seller.


Opinions?

2/15/2006 10:11:00 AM  
Anonymous Anonymous said...

Bernanke's comments relating to housing:

"Not all of the risks to the economy concern inflation. For example, a number of indicators point to a slowing in the housing market. Some cooling of the housing market is to be expected and would not be inconsistent with continued solid growth of overall economic activity. However, given the substantial gains in house prices and the high levels of home construction activity over the past several years, prices and construction could decelerate more rapidly than currently seems likely. Slower growth in home equity, in turn, might lead households to boost their saving and trim their spending relative to current income by more than is now anticipated."

2/15/2006 10:13:00 AM  
Anonymous Anonymous said...

He also said:
"Residential investment also expanded considerably in 2005, supported by a strong real estate market. However, as I have already noted, some signs of slowing in the housing market have appeared in recent months: Home sales have softened, the inventory of unsold homes has risen, and indicators of homebuilder and homebuyer sentiment have turned down. Anecdotal information suggests that homes typically are on the market somewhat longer than they were a year or so ago, and the frequency of contract offers above asking prices reportedly has diminished ... Thus, at this point, a leveling out or a modest softening of housing activity seems more likely than a sharp contraction, although significant uncertainty attends the outlook for home prices and construction."

2/15/2006 10:24:00 AM  
Blogger grim said...

Bernanke Says Fed May Need to Raise Rates to Restrain Inflation


Federal Reserve Chairman Ben S. Bernanke, in his first monetary policy report to Congress, said the U.S. economy is in a sustained expansion that may require additional interest rate increases to restrain inflation.

``The economic expansion remains on track,'' Bernanke said in the text of testimony to the House Financial Services Committee. In addition to high energy prices, ``another factor bearing on the inflation outlook is that the economy now appears to be operating at a relatively high level of resource utilization.''

The new Fed chairman described an economy that is in a durable expansion, using up available resources in productive capacity and labor markets. Additional rate increases may be necessary to keep inflation in check if economic data continue to come in stronger than expected, he said.

``The risk exists that, with aggregate demand exhibiting considerable momentum, output could overshoot its sustainable path, leading ultimately -- in the absence of countervailing monetary policy action -- to further upward pressure on inflation,'' Bernanke said. The Fed chairman said he concurred with the assertion in the Fed's Jan. 31 policy statement that ``some further firming of monetary policy may be necessary.''


grim

2/15/2006 10:26:00 AM  
Blogger grim said...

His statement was largely what was expected.. "Helicopter Ben" no longer exists.

My gut tells me 2 rate hikes and a pause at 5%.

Ben's conundrum is how to go about keeping consumer spending at record limits while dealing with a rapidly declining housing market.

That to me, is a soft landing. A hard landing for the real estate market, but a soft landing for the economy.

grim

2/15/2006 10:34:00 AM  
Anonymous Anonymous said...

-- in the absence of countervailing monetary policy action --


ding-ding-ding-ding-ding

5% Fed Funds is a lock

2/15/2006 11:00:00 AM  
Blogger Metroplexual said...

I agree on the rate. 5% and then a pause.

As for the economy, IMHO, I think it is quite fragile. What happens when MEW is out of the equation. People stop all the excess spending. I think that as housing prices decline you will see a large decline in purchasing.

It will only become apparent 1stQ next year after the elections and after reality sets in for all the maxed out credit card folks and those seeing their light and heating bill shooting up.

If we get another oil shock hitting the world economies (which is likely with Iran nuclear sabre rattling and the cartoon riot craziness) it will just add to the misery.

Airlines will go under, prices will go up stagflation will kick in. (I think we are in the midst of it already)

2/15/2006 12:06:00 PM  
Anonymous Anonymous said...

I am more optismistic. I think by next year, housing will slow down more, but this will not necessarily translate into a crash in the economy. Rates will still be historically lower conducive to propel an economy. Businesses will continue to grow and employment will be strong. I am in the market looking for a job and I would say that the job market is pretty strong as compared to 2001-2002. The stock market will perform very well and we will slowly see a shift of capital from housing into the stock market. Barring any major wars, I am bullish on the economy.

2/15/2006 01:13:00 PM  
Anonymous Anonymous said...

If a "hot" real estate area cools off, who's going to argue that it does not have larger implications? , Florida, may have some valuable lessons for the real estate industry as a whole.

7/09/2006 12:21:00 AM  
Anonymous Anonymous said...

Enjoyed visiting your site. Got to get back to my own, where we spotlight homes for sale on a website dedicated exclusively to the selling of a home. Not just any old website. But a website highly-ranked in the search engines , with thousands of back links already in place, directing traffic to a seller's exclusive listing.

7/09/2006 07:09:00 AM  

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