Mortgage Purchase Applications Rise 3.9% The Past Week

By
Real Estate Broker/Owner

According to the MBA, after five consecutive weeks in which the mortgage purchase application index remained below 270, signaling weak demand for real estate, the index rose 3.9% this past week to 277.7.

The 30-year fixed rate mortgage fell from 5.38% to 5.15% for the week ending August 14th.

Mortgage purchase applications are an indicator of future demand for real estate.  Typically a potential buyer will apply for a mortgage, write a contract that goes "pending", and then eventually close on the property for a "sale". 

The reason why demand is a critical component of a housing recovery is because the number of foreclosure filings just hit a record in July and are up 32% year over year.  There needs to be a buyer for the foreclosed properties.

While the most recent mortgage purchase application index is a move in the right direction, demand has yet to rise in proportion to the number of foreclosures that will be coming to the market over the next several months.  This means home prices will be going lower.

Comments (3)

Jim Crawford
Maximum One Executive REALTORS® - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR

Thank you for taking the time to share this.  I find it hard to believe there will be that much pent up buyer demand that will be able to absorb off this excess housing.

Aug 20, 2009 12:59 AM
Mark MacKenzie
Phoenix, AZ

Jim:  As it is currently constructed, the answer is no.  There are not enough first time home buyers to absorb the number of foreclosures.  There are however billions of dollars sitting on the sidelines waiting to be invested.  The problem is that the administration is not giving Americans any incentive to invest in the housing market or otherwise. 

Aug 20, 2009 01:16 AM
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Mark

That a step in the right direction for mortgage applications, let's hope it continues.

Good luck and success.

Lou Ludwig

Aug 20, 2009 12:10 PM