According to the Mortgage Bankers Association and their weekly mortgage application survey, mortgage purchase applications fell 9.4% from the previous week to 258.8. This is the lowest reading in 7 weeks when the survey fell to 256.6 during the week of May 22.
The reason the purchase application is relevant is because it is an indicator of future demand for real estate. And the reason this anemic demand for real estate is significant is because there is another tsunami of foreclosures that will be making land-fall within the next 6-12 months.
Interestingly, the 30-year fixed rate mortgage fell from 5.34% last week to 5.05% this week. This data once again re-affirms the fact that historically low mortgage rates have had virtually no impact on stimulating demand for real estate.
Here is a comparison between NAR's seasonally adjusted existing home sales and Freddie Mac's 30-year fixed rate mortgage survey over the past several months, this data reveals that record low mortgage rates have had no meaningful impact on demand. You can call it the law of diminishing returns, price inelasticity, beating a dead horse, whatever, this is a concept that I have wrote about on more than one occasion.
Sep 2008: 5.10 million sales / 6.04%
Oct 2008: 4.94 million sales / 6.20%
Nov 2008: 4.54 million sales / 6.09%
Dec 2008: 4.74 million sales / 5.29%
Jan 2009: 4.49 million sales / 5.05%
Feb 2009: 4.71 million sales / 5.13%
Mar 2009: 4.55 million sales / 5.00%
Apr 2009: 4.66 million sales / 4.81%
May 2009: 4.77 million sales / 4.86%