Mortgage Applications Still Falling

Jan 4th, 2008 @ 4:07 PM by Alden Smith

Mortgage applications continue to fall, with the rate at its lowest level since July of 2006.  The current level is the lowest it has been in 4 years.  On the same front, refinancing has dropped to an all time low since December of 2006.

This data, coming from the Mortgage Banker’s Association, is not surprising.  With the firestorm in the mortgage and sub prime market, people are not only afraid to take the chance on buying a home, but lenders are leery of anyone with less than impeccable credit scores.  Almost everyone has some issue with credit, even if it has been bad reporting on the top credit agencies, which affects your credit score regardless of whether you are in the right or not.  It will be exceedingly tough to get a mortgage approved in 2008.

The MBA’s seasonally adjusted index of total mortgage applications dropped off 11.6% in the final week of 2007.  Both the group’s purchase index and refinance index took a fall, with figures of 8.5% and 15.4% respectively.

Signs Of Weakness

Purchase rates are at their lowest since October 2003.  During the holiday week, despite falling rates, there was little application activity. The MBA does not see this easing up until mid-year of 2008.  The three indexes that the MBA tracks have continued to fall.  The country continues to lose jobs in the construction, manufacturing and retail sectors.  Leavitt and Sons, one of the nation’s top builders, has filed for bankruptcy.  The move has left many people in the East stranded with payment in houses, and no one to build them. To top this off, this is the slowest time of year for the real estate industry, with people not wishing to move in winter time.

No one can predict where this situation will go.  There are too many other factors and each of them interact with one another.  It is the overall picture that must be looked at.  All we are hearing lately is the mess in the sub prime market.  When all told we figure in every other factor, the picture changes.