It’s no secret that the housing market has been in trouble for several months now. That manifests itself in several different ways. One of the ways is that there are fewer and fewer people applying for mortgages these days. According to a report in Reuters, the number of mortgage applications being submitted has declined for the third consecutive week. In fact, the demand for housing loans is at the lowest level it has been at in 13 years.
Analysts use the demand for housing loans as an early indicator of how the home sales are going to fare in the near future. If the decline in loan applications is dropping as much as it has been lately, analysts are concerned that the housing market may get even worse than it is now. The market is already vulnerable and it seems like there is setback after setback just making things worse. How much more can the current market take?
According to the Mortgage Bankers Association, there has been an 8.5 percent drop in the number of seasonally adjusted mortgage applications. This includes refinancing applications and purchase loan applications. These numbers show that the demand for housing is still fairly weak. Michael Fratantoni, the vice president of research and economics for the MBA, also said that the “abundant inventory” or homes causes potential buyers to think that there is no urgency in locking in their purchase price. They know there are enough available homes to go around and there will probably be one for the same great price or below if they decide to wait.
A main reason for the drop in application numbers is probably due to the increase in mortgage rates recently. The MBA announced that the costs for borrowing on a 30-year fixed-rate mortgage averaged about 5.03 percent in the week ending on February 19. That figure is nearly a tenth of a percentage point more than the average for the previous week for the same type of mortgage. The all-time low for mortgage rates was set nearly one year ago when they were 4.61 percent during the end of March. For a 15-year fixed-rate mortgage, the current rates are averaging about 4.35 percent for the week ending February 19. Those numbers are up by about 0.02 percent from the week before.
If you have been considering buying a home recently, have you been putting it off for any particular reason? If so, what are your reasons? Are the mortgage rates going too high? Are you taking time to make your decision because of the number of homes available on the market today? Let us know your reasons below.
Comments
Jime
February 25, 2010
I'm an average Joe, the real Jose. The one that makes just a little more than minimum wage in North Hollywood. I like to think me and my wife 60k down-payment is enough but prices are too pricey for the houses. I cant risk buying a house that will just keep falling in price, im playing it safe until I see 1999 prices or close to it.
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AK
February 25, 2010
Here here Jose.
Totally agree. Prices in Southern California are still way out-of-line with income in the region.
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Struck
February 25, 2010
Mortgage rates are still very low. Refis may be drying up but for buying a home, the rates are really still at their bottom. So I don't think it's rates.
Probably most of the distressed sales are over. That and the tax credit which was set to expire juiced sales late last year.
I'm in no rush to buy, especially with rates poised to go higher. If rates go up, prices will come down. I'll take a cheaper house at higher rates than the other way around.
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