Mortgage Applications "Slowdown"
This Reuters report should clear up the conflicting reports on whether mortgage applications are rising or falling. "Prepayments on U.S. mortgage bonds fell in April due to a drop in collection days and a slowdown in mortgage applications, Wall Street analysts said on Friday."
"Also, the Mortgage Bankers Association's refinancing index implies a 10 percent decline."
11 Comments:
This is the key indicator, not home sales.
This explains a recent experience I had. I was on a website that purported to give you a breakdown of all the mortgage rates. I was purely curious as to whether I could refinance into a better loan than my 5% 30 year fixed.
As it turns out, thats probably unlikely. Anyway, this website makes you put in name and email address to get the rates. Fine whatever.
Over the next 2 weeks, even continuing into yesterday, 3 different mortgage companies have been flooding me with emails, and one of them even tracked down my home phone number and has been calling, literally, every day.
I was out of town for most of this, and when I finally was there to talk to them, I told they guy I just filled out that form to see the stupid rates, and that I saw no use in refinancing since I couldn't get a lower rate, and I certainly didn't want to get in any more debt.
The guy was practically begging me to "just fill out the paperwork and lets see what we can do". I finally told him there's no way. He then sighed and hung up.
My phone rang again 5 minutes later, and this guy's boss was on the line. He was chastisting me for not at least "letting them try to get me a better rate". He also suggested switching from a 5% 30 year fixed to an ARM (!).
I remember when I tried to buy my first house in 97, I was flat out denied, I had trouble getting lenders to even talk to me.
These people are desperate. They must really be floating a lot of bad debt with this sign em up at any cost approach.
Anyway, great website, I hope to see more!
9:00 Anon,
Thanks for the first hand account.
I've had the same experience. When my fiancee and I were thinking about buying house back in January, we applied for mortgages through a number of sources to find the best rates. As it turned out, we wised up and didn't buy, and told our mortgage companies no thanks.
The past few weeks, they have started calling again, offering us things like $2,000 towards our closing costs. I too think they are starting to get desperate.
I was going to buy smth. in Long Beach, about 1-2 months ago, but changed my mind. I filled applications with 2 lenders, got 2 pre-approvals. After 2-3 weeks they started to follow up with me asking whether I have found smth. I answered them that I did not like what was on the market for the price I was looking and decided to wait until prices will be more reasonable. And I heard from one of them: "Real estate is a great investment. Even if you got into something that may not be 100% of what you are looking for, you can and will build equity to continue upgrading ie. in a year from now you could have $100,000 in equity that you could roll into something else. Everyone needs a starter home!" I would expect to hear this from RE agent, but not from lender. I got a strange feeling like if I was on a used-cars dealership...
My wife and I had a similar experience, except it dealt with a real estate agent.
Just for grins, we walked in an open house "townhome" to take a look. It was priced at $650,000. We looked around, spoke with the agent and made the mistake of putting our real names on the sign in sheet.
Now, we get a least two calls a week telling us the price has lowered, etc. I explained to the agent at the open house that the price was double I wanted to pay or could afford, yet they continue to follow up with me. If I'm even on their radar for this over-priced property, these folks have got real problems.
Another sign of the end...I'm at a party 2 weeks ago in the O.C. (yep Orange County, CA) and start talking to my friend's brother. He's the younger brother (early 30's) and is nice guy but he has never gotten his life together. Anyway, he landed a job as a loan officer at a small brokerage office. Here is a guy who has never held a real job in his life, no post high school education. His work history is pretty much bartender, waiter, retail clerk. Oh yeah, mix in a few trips to jail...now 2 months into his on-the-job training selling loans he is advising people on perhaps the biggest purchase of their life. He and I get to talking and he tells me that he is slinging I/O left and right. In fact, he has yet to originate a traditional 15 or 30 yr loan. He wonders why anyone would choose a more expensive monthly payment? He says, "That's stupid...your going to make way more on appreciation than you ever will by paying down your principle." I interject. "Only if you believe a house is going to increases in value". I share with him that at some point in the near future these folks will need to start paying for the house. "No, they can just refinance again or sell it and make a couple $100K". I explained that home values fluxuate and that when only 11% of the local population can afford the median priced home (based on traditional lending standards 20% - 30yr), we are probably in for trouble. He got more animated and eventually we draw a big crowd. I was surrounded by folks sharing stories of how much they had earned from their house. So I pose the question, ”Oh did you sell and cash out?” Of course not, it was all on paper but nobody was listening…I was an island in a sea of financial insanity. I could not find one person in the group who had any memory of 1990…1982…etc. Seriously, people in Southern California are almost delirious about this stuff. It's Tulip mania down here. (It's actually quite impressive in its insanity) I guess my point is that if this guy is the person on the other end of the phone selling loans we can only expect BAD things around the corner! I presume there are a whole lot more folks like this advising the public on what to do.
Pete in OC
Pete In OC,
I hear you... this is crazy... it just reminds me of when in 1999 everyone wanted to be a stockbroker... and when someone said that it's a bubble, they were thought to be crazy... because they just couldn't make enough shares for everyone to buy... or the baby boomers will keep on buying because they need it for their retirement... it's just the same story... don't let it bother you... you're right... it's a mania and hopefully it will end soon...
Pete in OC, Anon 11:36:
I will drop. Been through 2 booms/busts in San Diego (SD). When it was going up, always heard: "This is SD, never goes down, were in the garden of Eden here, everybody wants to live here, no more land, restrictive building standards, etc., etc. Then guess what? The bottom falls out. Between 1990 and 1993, I lost 33% (1/3) of the value of my single family home, which is west of I-5 and less than 2 miles from the beach. So don't be fooled. I live in a "Prime" SD area and got hammered for a least 1/3 back then. Took 5-6 years to regain that. These people are unrealistic. Everbody in SOCAL wants to be just like the beautiful people in Hollywood: Millionaires, driving Benz's, playing with boats and jet ski's, etc. Like Bill Fleckenstein said, the economy cannot support that many millionaires. Also, many people have the "Veruca Salt" sydrome in this country. "I want it Daddy, and I want it NOW!!!" From Willie Wonka and the Chocolate Factory, 1970. By the way, you guys should see the bubble in old muscle cars, especially if it has a good ole big block under the hood. They've gone through the roof too!!
Pete in SD
Pete is SD
About the muscle car bubble, I can honestly say "there not making them anymore" LOL
oh man if you think a house is a money pit, try restoring an old corvette!
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