Mortgage Applications Fall Again, Is The Spring Bounce Over?
From Reuters:
U.S. mortgage applications decrease last week-MBA
U.S. mortgage applications fell for a third consecutive week, with demand for home purchase loans falling to its lowest since November 2003 despite a drop in interest rates, an industry trade group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended April 21 fell 3.7 percent to 548.6, its lowest level this year. It was 569.6 in the previous week.
The MBA's seasonally adjusted purchase mortgage index fell 4.4 percent to 389.4 from the previous week's 407.4, its lowest level since the week ended Nov. 7, 2003 when it touched 375.4.
The group's seasonally adjusted index of refinancing applications decreased 2.4 percent to 1,489.4 compared with 1,526.1 the previous week.
U.S. mortgage applications decrease last week-MBA
U.S. mortgage applications fell for a third consecutive week, with demand for home purchase loans falling to its lowest since November 2003 despite a drop in interest rates, an industry trade group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended April 21 fell 3.7 percent to 548.6, its lowest level this year. It was 569.6 in the previous week.
The MBA's seasonally adjusted purchase mortgage index fell 4.4 percent to 389.4 from the previous week's 407.4, its lowest level since the week ended Nov. 7, 2003 when it touched 375.4.
The group's seasonally adjusted index of refinancing applications decreased 2.4 percent to 1,489.4 compared with 1,526.1 the previous week.
15 Comments:
Some new readers might be wondering why we care about mortgage applications..
It's simple really. While the existing and new home sales data are very interesting, they are lagging indicators. They tell us what happened in the past.
In order to attempt a glimpse into the future, we need to find an indicator that correlates to future sales activity. Unfortunately, there is no crystal ball, it's just not that simple. However, we'll certainly take what we've got, and that is, purchase applications and refinance applications.
Joe Sixpack needs to apply for a mortgage before he buys a house. The MBA purchase index attempts to put a number on the purchase application activity. Now, it should be obvious that not every application results in a sale, and there is an equal chance that the survey doesn't capture all the activity. It's not perfect, but it's better than nothing.
So with purchase applications falling to levels not seen since 2003, it's readily unlikely that we're going to see sales return to 2005 levels in the near future. Decreasing purchase apps point to a decrease in demand.
But what about refinance applications you ask? Well, I like to keep an eye on refinance applications as a leading indicator of consumer spending. The correlation isn't as clear cut as purchase applications, and I'm sure many will argue that I'm really reaching here. But with cash-out refinancing at never-before-seen levels, I believe much of the boom in consumer spending has been due to "cashing out" equity. So why do we care? A drop in housing prices is bad, a drop in housing prices along with a drop in consumer spending would be terrible.
grim
Grim, What do you think will be the case at this time next year? Could house prices be what they were in 2002/2003 again??
coming, IMO, might make ours look like a molehill!
http://news.xinhuanet.com/english/2006-04/25/content_4469686.htm
Huge tracts of property unoccupied, expert warns
www.chinaview.cn 2006-04-25 08:10:42
BEIJING, April 25 -- An expert Monday warned that official figures are seriously underestimating the amount of property currently lying empty in China.
According to a first quarter report released by the National Bureau of Statistics on Saturday, 123 million square metres of space in new buildings was unused at the end of March, a rise of about 24 per cent year-on-year.
In the residential sector, 69.8 million square metres of housing is lying empty, an increase of approximately 20 per cent.
A standard two-bedroom apartment is about 100 square metres in size, so this means there are almost 700,000 apartments unoccupied.
"Our statistics only include the amount of property that has not yet been sold or rented," a bureau spokesman said yesterday.
However, according to Yin Zhongli, a real estate expert with the Chinese Academy of Social Sciences, if the space purchased by speculators but not yet sold on was factored in, the figure might be far higher.
Speculation in the real estate sector is quite common in China, Yin said. "Last year's figures in Shanghai showed that up to half of the new housing sold was not used."
But he could not give exact figures in terms of real vacancy rates, saying it was a hard to get an accurate number.
Yin warned a high housing vacancy rate might disturb the market order and trigger a financial crisis.
Different statistics have shown that the amount of vacant space in residential buildings has been on the rise in recent years, even as ordinary consumers complain they can hardly afford to buy a decent apartment.
In Beijing, for instance, there was 13.7 million square metres of vacant space in residential buildings in 2005, up by 32 per cent from a year earlier.
However, a report released by Beijing Normal University's Finance Research Centre earlier this month said that at least 70 per cent of urbanities could not afford to purchase new apartments.
The report said that buildings with vacant space were mainly in the country's coastal areas, leading property insiders to warn that supply and demand were unbalanced.
The National Statistics Bureau's report stated that, in the first three months this year, investment in apartments aimed at low and medium-income families rose by less than 3 per cent in contrast to the overall 23 per cent growth rate.
The total investment in the property sector reached 279.3 billion yuan (US$35 billion) in the first quarter, up 20 per cent over the same period last year.
Statistics also showed a 4 per cent drop in foreign investment in China's property sector in the first three months of the year, down to 5.2 billion yuan (US$650 million), while the total investment in the same period increased by about 25 per cent, reaching 564 billion yuan (US$70.5 billion).
(Source: China Daily)
Editor: Wang Yan
5Y yield at 5.10% this morning.
New Home Sales due out in half an hour.
grim
I thought this was interesting, on my way to work this morning on a telephone pole I saw one of those red and white signs that said, "Avoid Foreclosure call ....."
This is the first sign of this type I have seen. In the past I was seeing a lot of sings posted that said, "2% Mortgages Call Now"
delford,
Any way I might be able to get my hands on copies of those books, or at least access to them?
grim
New home sales up? Result of good weather and builder incentives or a hole in the bubble thesis?
Those new home sales numbers are beyond silly... the disconnect between this government survey and the existing home sales survey and reality is simply amazing... i also find it to be amazing how most of publicly traded new home builders are reporting sales numbers to be down in the range of 5%-25%... and they continue to guide downward... and homebuilders confidence has dropped to levels not seen since 2001.. simply amazing, indeed.
Hi, here's a quick snapshot of home sales for Hoboken (specifically 07030 zip code). I'll put it in 2006/2005/+/- format.
March: 5/86/-81
February: 5/39/-34
January: 6/34/-28
December: 4/15/-11
The prices seem to be running about 0-30% less than 2005 for the first three months of this year.
Source: http://www.melissadata.com//lists/ezlists/ezhomeowners.aspx
Sorry, forgot to sign off on that Hoboken data...
And, I think we can officially say Hoboken is dunzo.
JM
Chicago, all-
Any thoughts on which major banks, not mortgage companies, have the most exposure on mortgages?
It seems the really big banks (Citi, JPMorganChase, etc.) are going to have moderate hiccups from the coming residential real estate mess, but what about the next tier down. Who looks the most vulnerable?
JM
I wouldn't call it a conundrum since the 13% increase in March 2006 was compared to the dismal results of Feb 2006. Sales in March 2006 were down 7% versus March 2005. I love the way our media spins and or leaves our important facts. Have you noticed how the comparisons switched from YoY to MoM? Interesting.
Exactly..
Look for increasing usage of month over month comparisons in the coming months. Why? It fits the seasonal pattern of increasing sales until the summer peak.
grim
Anonymous said...
Chicago, all-
Any thoughts on which major banks, not mortgage companies, have the most exposure on mortgages?
It seems the really big banks (Citi, JPMorganChase, etc.) are going to have moderate hiccups from the coming residential real estate mess, but what about the next tier down. Who looks the most vulnerable?
JM
10:42 AM
sorry - I was out today
Don't worry about i-banks and global banks [JPMC & CITI].
I haven't looked at this stuff for awhile, but I seem to recall WaMu being the poster child for getting it's tuchus kicked when this turns.
I have been following a site now for almost 2 years and I have found it to be both reliable and profitable. They post daily and their stock trades have been beating
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RickJ
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