Mortgage Applications Decline

May 23rd, 2008 @ 4:19 PM by Alden Smith

The market took a real beating this week – according to the Nightly News due to rising oil prices – and we once again see a decline in mortgage applications.  Not surprising here.  Stats show that they fell 7.8% for the week ending May 116th.  The Mortgage Bankers Association’s application index fell to 621.6 from 674.4 the previous week as both refinance and purchase volume declined.  There appears to be no bottom yet, and I don’t really expect to see one until some time near the end of 2009.  Surely, it will take that long to sort everything out.

Foreclosures are still a big deal right now, with a lot of people struggling to get any kind of real help that will get them on the right path.  The government is making big noise, yet I see little action in my meanderings.  I find this curious in an election year, but possibly the next Prez will attempt to put a feather in his hat by coming up with something that works.  I cannot see how they can straighten out anything when a great deal of these mortgages are bundled into securities, and hedge funds, etc are beginning to snatch them up to flip them to make a quick buck.

An interesting note is the number of refi applications that went across the board.  Figures were 48.2% of all applications, 48.7% last week.  It seems people are interested in refinancing, and you have to wonder why that is.  I believe that many people are in pretty dire need right now.  In discussion with my son, who commutes, we figured every dollar I make is worth 3 dollars to his one because I commute about 20 feet to get to work.  He drives about 30 miles one way.  Of course, in conjunction with all that, food prices are rising, and this helps little when you consider that this is our one most basic need.  I wonder how long this will go on until there is something done.  Diesel fuel was $4.79 today, and my research shows the average trucker gets 3.5 miles per gallon.  And we wonder why a gallon of milk is $2.34.

I guess my whole point is this – with everything stirred into the mix, housing is just not so much a high priority as it was when I first married.  We did not struggle to keep a roof over our head, food was cheap, and gas was not even considered in the monthly budget.  Now, with all these things figured in, the mortgage on the fancy home we just had to have is not looking quite as pretty as it was.  With the median price of homes falling, it is understandable to me that the high cost of homes in particular areas of the country need to correct themselves before anything else can be done.  And I think this is what we are seeing.