Who Broke The Mortgage Market And When Will It Be Fixed?

David Goldsmith

All Powerful Moderator
Staff member
 

David Goldsmith

All Powerful Moderator
Staff member

Applications for home loans at lowest level since 2015
Declines reverberating throughout residential real estate market

Home buyers are retreating from the market as effects of the pandemic reverberate across the residential sector.

Loan applications for home purchases fell last week to the lowest levels since 2015, according to Bloomberg, which cited the Mortgage Bankers Association’s purchase index. And the four-week drop in the index was the steepest since 2010, in the aftermath of the Great Recession.

Mortgage applications fell last week, as economic weakness and the surge in unemployment continue to weigh heavily on the housing market,” Joel Kan, the trade group’s associate vice president of economic and industry forecasting, said in a statement.

“Purchase activity declined again, with the index dropping to its lowest level since 2015 and now down 33 percent compared to a year ago,” he added.

There was a 19 percent drop in refinancing applications, according to the group’s measure. Mortgage applications were down 17.9 percent.

Taken together, figures across different parts of the residential market paint a somber picture. Last month new leases fell to record lows and contract signings for properties above $4 million also tapered.

According to the Mortgage Bankers Association’s website, the weekly survey used to produce the loan-application index covers 75 percent of all U.S. retail residential mortgage applications
 

David Goldsmith

All Powerful Moderator
Staff member

Homeowners looking to refinance boost mortgage applications
There was a 7.3% increase in applications, according to Mortgage Banker Association’s weekly index

Home loan applications trended upward last week, buoyed by homeowners looking to refinance.

The Mortgage Bankers Association’s weekly index measuring home loan application volume saw a 7.3 percent increase last week, for the period ending April 10.

Refinancings accounted for 76.2 percent of mortgage activity last week, according to MBA. That marks a 10 percent increase from last week, and a 192 percent jump year over year.

Still, that’s down 26 percent compared to four weeks ago, when the Federal Reserve’s first emergency rate cut had mortgage lenders anticipating a bumper year and a boom in refinance applications. The overall number of applications is down 28 percent compared to four weeks ago.

MBA’s purchase index slid almost 1 percent, marking the fifth consecutive weekly decline in home purchase applications. In the previous period, the week ending April 3, purchase application activity fell to its lowest level since 2015.

Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, said the purchase index was down 35 percent compared to the first week of March.

But he pointed to the 30-year fixed mortgage rate declining to 3.45 percent as a sign that the mortgage-backed securities market is “stabilizing.” That marks a 4 basis point drop from the previous week’s contract rate, which is down nearly 99 basis points year over year.

When the Fed announced its second rate cut in mid-March, it also announced it would purchase at least $200 billion of mortgage-backed securities, which experts said would allow banks to keep lending and set the stage for recovery.
 
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