A combination of weather and low demand has led to a 13 year low in demand for mortgage applications according to The Mortgage Bankers Association. Demand for mortgages has not been this low since 1997.
Hopefully the market slowdown is a statistical blip due to the harsh winter that so much of the country has been dealing with. Unfortunately the uncertainty of the market and economy has all of us scoreboard watching. The demand for new mortgages is the canary in the coal mine for the real estate industry.
If mortgage applications drop typically closing are not on the horizon.
A continued drop in demand for purchase loans, a tentative early indicator of home sales, would not bode well for the hard-hit U.S. housing market, which remains highly vulnerable to setbacks and heavily reliant on government intervention.
The Mortgage Bankers Association reported an 8.5 percent decline in its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended February 19.
The four-week moving average of mortgage applications, which smoothes the volatile weekly figures, was up 1.6 percent.
The MBA’s seasonally adjusted purchase index fell 7.3 percent, the lowest level since May 1997.
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I assume the refi’s contribute the majority of the 8.5% decline in new mortgages as most home values have fallen. It’s quite a predicament that homeowners are in right now with them not being able to refinance their homes. Banks also have tighter lending standards that are not helping the situation for the better.
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