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Nickelless
Administrator
USA
5580 Posts |
 Posted - 10/22/2008 : 11:41:19
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Another story from Yahoo News:
NEW YORK (Reuters) – Demand for applications to buy U.S. homes and refinance mortgages sank to the lowest level in nearly eight years, a trade group said on Wednesday, in the heart of a financial crisis that has sapped consumer confidence.
The Mortgage Bankers Association's seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, slid 16.6 percent to 408.1 last week, the lowest reading since December 2000.
Potential buyers are in many cases paralyzed by tumbling stocks, a two-year home price slump that has room to run, mortgage rates close to the year's peak and higher downpayments required by lenders making it harder to get a mortgage as foreclosures spike.
Job insecurity is also increasing as a recessionary economy means unemployment will rise from its five-year high, many analysts say.
"A lot of individuals are just not thinking about buying a house now," said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh. "They're uncertain, their confidence isn't high, they're feeling that they might not qualify for a loan anyway so why even bother to apply."
Many consumers are holding out for lower mortgage rates and signs that house prices are stabilizing.
"For most people, they don't feel this is the right time to be buying a house, either because the price is going to come down or they can't get a mortgage or they don't feel real secure about their job future or income prospects," Hoffman said. "They aren't willing to make what usually for most families is one of the biggest ever financial commitments they're going to make."
The exceptions, he said, are in some markets where home prices are drastically reduced, luring bargain hunters.
The Mortgage Bankers Associations's purchase applications index fell 10.9 percent to 279.3 in the week ended October 17, while its refinancing applications gauge tumbled 23.5 percent to 1,158.8.
A drop in the 30-year mortgage rate of 19 basis points to an average 6.28 percent rate failed to stem the slide in applications. This fixed rate had jumped by almost half a percentage point the prior week, in what the MBA said was the biggest one-week increase in more than five years.
The 30-year home loan fixed rate this year was as high as 6.59 percent during the summer and as low as 5.49 percent in January, according to the Mortgage Bankers Association.
The latest applications results include an adjustment to account for the Columbus Day holiday on October 13.
Underscoring the soft demand for mortgages, the trade group said the U.S. economy is in a recession that will persist until the middle of next year.
"A recession appears to be under way, as evidenced in rising unemployment, contracting manufacturing activity and declining inflation-adjusted consumption spending," Jay Brinkmann, the MBA's chief economist, said on Tuesday at the group's annual convention in San Francisco.
"We expect residential investment to decline further through the first half of 2009, due to the excess of supply of houses and weakened demand from the recession."
The housing sector has more pain to endure, Brinkmann said, with the worst downturn in new home sales and construction still ahead and the foreclosure rate set to rise.
(Additional reporting by Patrick Rucker in San Francisco; Editing by Andrea Ricci)
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Mortgage applications sink to 8-year low
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