Mortgage Applications Drop Even as Rates Fall

[AllentownJake]

U.S. mortgage applications fell last week, with demand for home purchase loans dropping to a 12-year low even as interest rates on 30-year loans fell to their lowest level in six months, data from an industry group showed on Wednesday.

Home purchase loan demand fell for a sixth straight week, a trend that does not bode well for the U.S. housing market, which has been showing signs of stabilization after a three-year slump.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, decreased 2.5 percent to 611.7 for the week ended Nov. 13.

The hard-hit housing market, a primary driver of the worst U.S. recession since the 1930s, remains highly vulnerable and many are hopeful that the federal government's intervention will prevent any setbacks.

http://www.cnbc.com/id/34010740http://www.cnbc.com/id/34010740

[Junkdrawer]

1. And yet home sales rise - Banks "selling" homes to their own divisions?

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=7033020&mesg_id=7033058

[Roland99]

4. Anything to keep that bubble inflated at least a little bit, eh?

[dysfunctional press]

24. or- the people who are doing the buying are the kind of people who don't need to take out mortgages.

we may be seeing the beginnings of our future feudal system.

[AllentownJake]

2. The more I read, the more I believe this "recovery" is in reality

simple accounting fraud.

[ixion]

3. that's exactly what it is: voodoo economics

if you look closely, you see that we are screwed.

[AllentownJake]

13. This is something worse than Voodoo economics

unfortunately.

[Junkdrawer]

5. The banks are making real money - for banks...

Proprietary Trading with 0.25% interest rate money from the FED.

None of that trickles down...

Good series from Jane D'Arista on TheRealNews...

http://therealnews.com/t2/index.php?option=com_content&task=view&id=33&Itemid=74&jumival=472

[Warpy]

6. The stimulus made job losses a little less horrific

but it didn't stop them and it didn't create any new jobs.

That has yet to be done. Until it is, there is no real recovery, even though the falling dollar has made the stock market look like a good deal to offshore investors.

This country is a hollow shell guarded by nukes. Until and unless we put people back to work rebuilding strategic industries from the ground up, there sill be no recovery and this country will be weak and vulnerable.

Multinational corporations building plants elsewhere to take advantage of emerging markets was a great idea. Allowing them to shut everything down in this country was the stupidest thing a lazy and corrupt Congress has ever done.

[Statistical]

7. How exactly does Congress prevent a company from shutting down a plant?

[AllentownJake]

8. You don't

You can encourage conditions they don't via tax breaks, increasing demand via the government or imposing tariffs on foriegn competitors.

[Statistical]

9. Agreed however other countries can also encourage the same

by lowering taxes, providing subsidies, providing offsets for tariffs etc.

The poster I responded to seem to think Congress could simply mandate no closing plants.

[AllentownJake]

12. Other countries have been doing that for years

We have been competing at a disadvantage.

[Warpy]

14. Fines and tariffs

The US is still the primary market for these clowns. Slapping them with tariffs to make foreign produced goods as expensive as or more expensive than keeping the plants open in the US would have saved our jobs. More importantly, it would have kept strategic industries here.

Consider we no longer make such basic items as textiles and shoes. There is no way we can survive a big war let alone win one.

Congress should have acted starting in the 70s. They were too weak and corrupt then as they are now.

[Shagbark Hickory]

10. Maybe this means people are actually saving up, paying cash, in lieu of other investments.

Mortgages are a scam anyway. This glass is totally half full.

[AllentownJake]

11. That doesn't make much sense

people are suddenly purchasing a house a capital asset worth somewhere in the neighborhood of $150,000 to $300,000 with cash.

Particularly when there are reports that cash sales have been extremely difficult.

[Shagbark Hickory]

15. People got out of the stock market. Not everyone was totally broke and some...

were forced into retirement, these folks may have had the dough to pay cash for a home.

[Junkdrawer]

16. *Someone* was buying homes with cash - more likely banks selling to their own divisions

See Post #1

[AllentownJake]

17. Still doesn't make sense

Particularly with the supposed success of the first time home owner tax credit....there are a whole bunch of people who haven't owned a house in 3 years with large liquidated stock portfolios buying houses for cash?

When did these supposed people get out of the market? In April or September?

I think the more likely scenario is that the books are being cooked. As someone pointed out up thread Bank of America is selling houses at auction than buying them back in a different division.

[Statistical]

20. Still makes next to no sense.

There is something called the opportunity cost of money.

It doesn't matter if you have the cash or not paying cash for a house is extremely expensive. Mortgage rates (compared to other debt) is extremely low and is tax deductible so the comparable pre-tax rate on say 5% mortgage and 25% marginal tax rate is 3.75%.

If you can earn 3.75% on your money it is more expensive to pay cash for a house then to get a mortgage and use the cash to earn 3.75%+ and use interest from that investment to make mortgage payments.

[AllentownJake]

21. Thank you for taking a different angle than me

[KharmaTrain]

18. Credit Remains Tight...

The banks are ready to gamble on the "riff raff" quite yet. Credit is still tight as a drum for anyone without super clean credit and a decent downpayment or colateral. They're trying to recoup losses through jacked up interest rates and writing down bad properties and loans. There's no incentive for most banks to ease lending that is needed to get the consumer economy and jobs rolling again.

Gone are the days of the quick re-fi as there's no big money for the banks with low property values. There's little motivation in lending to a small business as squeezing existing customers with higher rates and fees fill up the coffers faster with little downside. The banks know they can get away with squeezing those in the revolving debt door knowing they can count on Geitner to cover any losses.

[AllentownJake]

19. This article is about applications

Not approvals.

[Junkdrawer]

22. LOL - At least 2 unrecs...

It's a REAL recovery, I tell you...

Well, mostly real...

OK, the banks are doing great...

[Nikki Stone1]

23. .

>

[Nikki Stone1]

25. If hyperinflation is coming, the banks would rather keep the property

Otherwise they are left with a bunch of 20 and 30 year mortgages for a hell of a lot less than the house is worth in inflated dollars.