Mortgage Applications Collapse To 18-Year Lows

After sliding 2.1% the prior week, mortgage applications collapsed 7.1% last week as mortgage rates topped 5.00%

Ignoring the collapses during the Xmas week of 12/29/00 and 12/26/14, this is the lowest level of mortgage applications since September 2000…

https://www.zerohedge.com/sites/default/files/inline-images/2018-10-17_5-01-53.jpg?itok=w_KjBWqP

The Refinance Index decreased 9 percent from the previous week

The seasonally adjusted Purchase Index decreased 6 percent from one week earlier. The unadjusted Purchase Index decreased 6 percent compared with the previous week and was 2 percent higher than the same week one year ago.

Perhaps this is why…

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest level since February 2011, 5.10 percent, from 5.05 percent, with points increasing to 0.55 from 0.51 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.

https://www.zerohedge.com/sites/default/files/inline-images/2018-10-17_5-09-19.jpg?itok=Ic6nVlc8

Still, The Fed should keep on hiking, right? Because – “greatest economy ever..” and so on…

As we noted previously, the refinance boom that rescued so many in the post-2008 ‘recovery’ is now over. If rates hit 5%, the pool of homeowners who would qualify for and benefit from a refinance will shrink to 1.55 million, according to mortgage-data and technology firm Black Knight Inc. That would be down about 64% since the start of the year, and the smallest pool since 2008.

Naturally, hardest hit by the rising rates will be young and first-time buyers who tend to make smaller down payments than older buyers who have built up equity in their previous homes, and middle-income buyers, who can least afford the extra cost. Khater said that about 45% of the loans that Freddie Mac is backing are to first-time buyers, up from about 30% normally, which also means that rising rates could have an even bigger impact on the market than usual.

Younger buyers are also more likely to be shocked by higher rates because they don’t remember when rates were more than 18% in the early 1980s, or more recently, the first decade of the 2000s, when rates hovered around 5% to 7%.

“There’s almost a generation that has been used to seeing 3% or 4% rates that’s now seeing 5% rates,” said Vishal Garg, founder and chief executive of Better Mortgage.

Source: ZeroHedge

***

Mortgage Refinancing Applications Remain In Death Valley (Hurricanes Michael And Jerome)

Between Hurricanes Michael and Hurricane Jerome (Powell), mortgage refinancing applcations are taking a big hit.

The Mortgage Bankers Association (MBA) refinancing applications index fell 9% from the previous week as 30-year mortgage rate continued to rise.

https://confoundedinterestnet.files.wordpress.com/2018/10/mbarefirates.png?w=624&h=449

Mortgage purchase applications fell 5.52% WoW, but it is in the “mean season” for mortgage purchase applications and there was a hurricane (Michael). And then you have hurricane Jerome (Powell) battering the mortgage markets.

https://confoundedinterestnet.files.wordpress.com/2018/10/mbastats101718.png?w=624&h=449

In addition to Hurricane (weather and Federal government), there is also the decline in Adjustable Rate Mortgages (ARMs) since the financial crisis.

https://confoundedinterestnet.files.wordpress.com/2018/10/arm.png?w=624&h=449

 

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