Mortgage Applications Tank: Worst To Come?
Happy days are here again! America is in recovery! Buy! Buy! Buy!
All of the signs seemingly point to “yes” – including an eight-year spike in homebuilder confidence reported earlier this week – but the reality isn’t quite so rosy.
How do we know this? Because as part of our founding editor’s efforts to impress Bloomberg’s Jeanna Smialek, we follow mortgage applications – a.k.a. the lifeblood of the U.S. housing industry. And according to the Mortgage Bankers’ Association (MBA), applications fell 5.5 percent for the week ending December 13 – a sixty percent drop-off from their 2013 high.
In fact mortgage applications haven’t seen volumes this low since December 2000, according to Mike Fratantoni – the MBA’s veep for research and economics.
“Mortgage applications fell further last week, with the market index falling to its lowest level in more than a dozen years,” Fratantoni said.
Yeah. And it looks even worse than it sounds …
(Click to enlarge)
In other news the average interest rate on a 30-year housing loan inched up to 4.62 percent while the average rate on a 15-year loan remained at 3.66 percent.
Surely with an improving economy things will get better in 2014, though … right?
Rising interest rates are likely to severely depress mortgage originations next year. In fact a report issued this week by KBW analysts Bose George and Jade Rahmani projects just $1.15 trillion worth of residential mortgage origination in 2014 – down from $1.8 trillion this year. Then there’s 1800 pages of new government mortgage regulations imposed by Washington D.C.’s latest alphabet soup bureaucracy – the Consumer Financial Protection Bureau (CFPB).
FITS has been consistently calling out the housing “recovery,” and while we hope things turn around in 2014 the early projections obviously aren’t good. Remember this is an industry government artificially inflated for years … with tragic consequences for the U.S. economy.