The Mortgage Bankers Association announced that mortgage purchase applications declined -11.3% to 264.1 from last week despite the 30-year fixed rate mortgage holding at 4.70%.
Despite the historically low mortgage rates, the four-week moving average for the purchase index is up just 0.6%.
What this index continues to communicate is that despite four consecutive weeks in which the 30-year mortgage has averaged 4.66%, there has not been any meaningful impact on demand for purchase mortgages applications or subsequently real estate.
And the two reasons why low mortgage rates have not had a meaningful impact on demand is because housing affordability since December of 2008 has been the highest on record, it is no longer about increasing housing affordability or lowering mortgage rates. Additionally, the pool of qualified home buyers continues to contract as unemployment continues to surge. Since November of 2008, nearly three million Americans have lost their job.
The solution to the housing market is not about lower mortgage rates or first time home buyers, the solution is about stimulating investment demand for real estate by accelerating the depreciation scale and making that tax incentive available to all Americans, not just banks like Wells Fargo.
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