Wednesday, June 07, 2006

Home Loan Applications Mostly Flat

From Reuters:

US home refinancings at 2006 low despite rates dip

"U.S. home loan refinancing applications last week sunk to their lowest this year and new home mortgages barely budged, lending support to the view that even lower interest rates will not heat up the already cooling U.S. housing market, an industry group's figures showed on Wednesday."

"The Mortgage Bankers Association's seasonally adjusted index of mortgage application activity -- which is made up of both refinancing and purchasing loans -- fell 1.4 percent to 534.4 in the week ending June 2 from the previous week's 541.9."

"The seasonally adjusted refinancing index last week fell 3.8 percent to 1,356.0, its lowest level since the week ended Dec. 30, 2005 when its reached 1,363.2."

"A year earlier the index stood at 2,362.1."

"The group's seasonally adjusted purchase mortgage index was nearly unchanged at 395.6 from the preceding week's 395.5 figure."

"However, the purchase index--considered a timely gauge of U.S. home sales--was substantially below its year-ago level of 479.3."

25 Comments:

Blogger minutesfromNYC said...

I guess not everyone can afford a house?

6/07/2006 07:04:00 AM  
Blogger InvestorDavid said...

Why is that a surprise that re-fi application went down? Many already re-financed when the rate was truly low.

6/07/2006 07:24:00 AM  
Blogger RichInNorthNJ said...

Many already re-financed when the rate was truly low.

But I would think those that see the writing on the wall would refinance out of their ARM loans if they are set to adjust, right?

Or would the average % change to a higher rate be small and give a lower rate than the current rate?

6/07/2006 07:39:00 AM  
Blogger grim said...

Many took ARM and IO loans because they could not afford traditional fixed products.

Refinancing is an impossibility for most of these people. And we haven't even introduced the problems associated with declining values. You can't refi if you are underwater without a check for the difference.

grim

6/07/2006 07:43:00 AM  
Blogger InvestorDavid said...

richinnorthnj,

I beleve that many who bought their houses with IO and ARMs just wanted to sell their houses before the Real payment kick in.

They are all trying to sell their houses rather than trying to re-finance. Thus, so many inventories are out there in the market.

These people weren't going to keep their houses anyway. Many simply couldn't pay the real mortgage to begin with.

I know many people making $100K bought over $1M houses hoping to make money by selling before the real payment is due. And many didn't have any equity in their houses as they bought their houses with zero money down.

Just my opinion.

6/07/2006 07:47:00 AM  
Blogger Richie said...

I'd have to agree with that statement. People were banking in on the rising home prices, factored in with the $250k/$500k tax-free profit from selling their house after they lived in it for 2 years.

Nobody thought about the "what-if" scenario.. Everyone beleived that there truly was no more land, and that houses were scarce. Not anymore.

If it sounds too good to be true...

6/07/2006 07:56:00 AM  
Blogger RichInNorthNJ said...

Thanks to both of you, excellent points.

I guess I can’t stop thinking in my financially conservative way.
Maybe I was thinking of the "savvy" people these loans were SUPPOSED to reach that are mentioned in all of the loan descriptions.

6/07/2006 07:58:00 AM  
Blogger InvestorDavid said...

I took my family to Swan Lake in Upstate New York this weekend. After driving for 30 minutes, all I saw was nothing but land and land and land with no houses.

Once Real payment are due for all these people who bought their houses with IO and ARM, we will see an avalanche of houses on Market. It just began.

6/07/2006 08:02:00 AM  
Blogger InvestorDavid said...

richinnorthnj,

Did you really read all those tiny little letters in the loan application? :)

My eyes are failing to read those darn little letters.

yes, it was "supposed" to be for the upstart young professionals.

6/07/2006 08:04:00 AM  
Anonymous Anonymous said...

took a different route to work today in essex county. there are for sale signs EVERYWHERE. there should be no doubt prices are heading lower led by those who have to sell (bought another property, job transfer, retirement/relocation, broke, etc.)

sit tight folks. in 6 months you'll be able to take at least another 10% off what they're lowest accepted offer would be today.

6/07/2006 08:31:00 AM  
Anonymous Anonymous said...

anon 9:31 was mine (Richard). website a little buggy today.

here's another example of deep price jobs (prob due to purchase of another home). i saw this property in new providence (2276512) back in february. asking price $629k. well it didn't sell after dropping to $589k so they relisted at $555k. now today we're at $519k for a 17.4% drop, and it isn't even sold yet!

now how stupid would one of felt if you bought at $550k which would've been considered a great bargain off asking?

this is why asking prices mean NOTHING. you have to look at comps and the direction of the market.

6/07/2006 08:36:00 AM  
Blogger Richard said...

anon 9:31 was mine (Richard). website a little buggy today.

here's another example of deep price jobs (prob due to purchase of another home). i saw this property in new providence (2276512) back in february. asking price $629k. well it didn't sell after dropping to $589k so they relisted at $555k. now today we're at $519k for a 17.4% drop, and it isn't even sold yet!

now how stupid would one of felt if you bought at $550k which would've been considered a great bargain off asking?

this is why asking prices mean NOTHING. you have to look at comps and the direction of the market.

6/07/2006 08:36:00 AM  
Anonymous UnRealtor said...

"Many took ARM and IO loans because they could not afford traditional fixed products. Refinancing is an impossibility for most of these people."


Much pain -- can't afford the increasing mortgage payments, and can't bail out by selling to a Greater Fool in the post-bubble market.

What would Suzanne do?

6/07/2006 09:05:00 AM  
Anonymous Anonymous said...

BTW who is this Suzanne that everyone keeps jokingly referring?

Is this Suze Orman?

Andy

6/07/2006 09:26:00 AM  
Anonymous Anonymous said...

Hah Hah Ho..guess Andy missed the show.


Where's the link to that C21 commercial "Suzanne says..."


Pat

6/07/2006 09:48:00 AM  
Blogger grim said...

"Suzanne researched this" - is an inside joke among real estate bloggers. It refers to a Century 21 television ad where a wife and realtor berate a Homer Simpson-esque husband for hesitating on a real estate deal.

The Debate (Video)

6/07/2006 09:49:00 AM  
Blogger InvestorDavid said...

When I was a grad student at Cal, I had a conversation with my professor regarding so many wild fires in Ca. He said, it is quite natural since Ca was a desert and wild fire will keep the land "clean" and allow new bush/trees to grow (also creating fertilizer).

To me, same thing should happen in the real estate market. Let the wild fire burn and start anew. Let the people who took the risk of IO and ARM be responsible or burn by it. Start anew.

New Beginning. Phoenix.

6/07/2006 10:10:00 AM  
Anonymous UnRealtor said...

That "Debate" TV commercial will go down in history as the turning point of the Great Real Estate Bust.

People will read about it in textbooks.

6/07/2006 10:23:00 AM  
Anonymous Anonymous said...

Maybe they can't refi from their ARMs to a fixed rate.

Most probably can't afford to.Big problema.

Bababababababa

Boycott Snoot Raised Chatham Houses

Booooooooycott Houses

Bob

6/07/2006 10:32:00 AM  
Anonymous gary said...

Suzanne. HAAHAAAAA!!! Yes, I love that commercial.

6/07/2006 10:47:00 AM  
Anonymous Anonymous said...

That commercial is an advertisement for marriage counseling.

Maybe Dr. Phil can buy the rights to it from C21, and the profits can go towards early retirement windows for C21 agents.

That will help clear some of them.

Suzanne and the rest of them can hook up with out-of-work travel agents to start a new industry: We Housesit while you are on vacation.

Pat

6/07/2006 11:03:00 AM  
Blogger RentinginNJ said...

Interesting...While refinancing hit a low this month, credit card debt just jumped. It looks like the house ATM is running dry, but it isn't stopping people from borrowing.

6/07/2006 08:08:00 PM  
Anonymous Anonymous said...

Time for another round of tax cuts.

6/07/2006 09:12:00 PM  
Anonymous Anonymous said...

They have to borrow, that is run up the credit card dept to pay the mortgage.

6/08/2006 05:25:00 AM  
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6/15/2006 06:41:00 PM  

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