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.
Ouch, right?
Yeah. And it looks even worse than it sounds …
(Click to enlarge)
Chart: Bloomberg
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?
No …
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.
11 comments
Yup, interest rates started rising this year, so it is going to have a pretty big effect on mortgages, at least for now. I wonder if that’s going to keep through 2014, though.
I’m glad I got my mortgage done before this year, that’s for sure.
You must be delusional. I saw the Charleston Realtors Association said that everything is peaches and roses in the LowCountry and we should buy, buy BUY!.
Sic Willie only follows the market in the screen door to Hell, aka Richland/Lexington.
Then you can buy some Wind Insurance and then you can buy some Flood Insurance along with the regular Homeowners Insurance and then you can buy some insurance riders, did I leave any out?
It costs money to live in paradise.
Fewer people taking on housing debt. Shouldn’t that be a good thing, from your perspective?
There’s been talk of another bubble in Europe. And, the newest Nobel economist, Robert Shiller, says Brazil is in one while they think it’s the sign of being a big boy economy.
Slow and steady is good where the housing market is concerned.
For 50 years before the crash, housing appreciated an average of 3% a year. But, the Libertarian Alan Greenspan thought 100% was normal as we built to the crash.
sorry but that chart doesn’t jive with actual events over the last decade. something is very wrong.
True. Change the dates in this chart and compare it to the Bloomberg chart above: http://research.stlouisfed.org/fred2/graph/?s%5B1%5D%5Bid%5D=HSN1F
Something’s up.
If anyone does not see what is coming, too bad. It will be so bad once interest rates rise while the Federal Reserve owns your mortgage, you may wish you were serving a 50 year sentence in a state prison. So be it. Even if you rent, the apartment complex has a mortgage, and the Fed owns that too. We call them “sheeple” those that see no further than three feet in front of their nose.
Young people are on the sidelines because they are unemployed or underemployed. Babyboomers are paying cash. It is about demographics and economics. Listening to Will analyze real estate is about as useful as listening to a real estate agent analyze politics.