Mortgage Applications in U.S. Drop to the Lowest Level Since December 2000

[marmar]

from Bloomberg:



U.S. MBA's Mortgage Applications Index Fell 1.5% Last Week

By Timothy R. Homan

Aug. 20 (Bloomberg) -- Mortgage applications in the U.S. declined last week to the lowest level since December 2000 as fewer homeowners sought to refinance their loans.

The Mortgage Bankers Association's index of applications to buy a home or refinance a loan dropped 1.5 percent from the prior week to 419.3. The group's purchase index fell 0.4 percent and its refinancing gauge slumped 3.7 percent.

Higher borrowing costs, stricter loan standards and falling property values are preventing owners from tapping into home equity, raising the risk that consumer spending will slow even more. The worst homebuilding recession in 26 years is likely to remain a drag on growth.

``The biggest threat to the economy is the fragility in the financial system, which stems largely from the deteriorating performance of residential real estate credit,'' Michael Feroli, an economist at JPMorgan Chase & Co. in New York, said before the report. ``That performance is unlikely to improve until there are signs of some stabilization in house prices.''

The purchase index fell to 314 after no change the prior week. The refinancing measure declined to 1034.5, also the lowest level since December 2000, from 1074.6 the prior week.

The share of applicants seeking refinancing fell to 34.8, the lowest since July 2006, from 35.2 percent the prior week.

The average rate on a 30-year fixed loan dropped to 6.47 last week from 6.58 percent, the report showed. In mid January, the rate was at an almost three-year low of 5.5 percent. .......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aNEDnW3ffyr0&refer=home

[slackmaster]

1. I see this as good news because it puts more downward pressure on prices

Housing affordability in San Diego is now at its highest point since Q1 of 2000.

[Yavin4]

2. Debt Spending = Growth

"The worst homebuilding recession in 26 years is likely to remain a drag on growth. "

So, in order for our economy to grow, the masses have to borrow and spend. What ever happened to building products that the world wanted and needed? What happened to developing new technologies to do things better, cheaper, and cleaner?

All that is gone. Our economy today is borrowing and spending.

[marmar]

3. "Our economy today is borrowing and spending."

And that party is over.