The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending July 30, 2010.
Here is an excerpt from the report:
The MBA's loan application survey covers over 50% of all U.S. residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a snapshot view of consumer demand for mortgage loans. In a low mortgage rate environment, a trend of increasing refinance applications implies consumers are seeking out a lower monthly payment. If consumers are able to reduce their monthly mortgage payment and increase disposable income through refinancing, it can be a positive for the economy as a whole (creates more consumer spending or allows debtors to pay down personal liabilities like credit cards). A falling trend of purchase applications indicates a decline in home buying demand, a negative for the housing industry and the economy as a whole.
Plain and Simple: Refinance demand continues to bolster the mortgage market as purchases account for only 22% of new loan apps. Home buyers are utilizing the FHA for low downpayment home financing. This is no surprise given the massive destruction of wealth that has occurred over the last two years. Although mortgage rates are hovering near record lows, and will likely hit new lows in the next release as more lenders are offering 4.25% on rate sheets this week, refinance demand just isn't what it was last spring. This proves the theory that the pool of qualified borrowers has shrunk right along with the industry, or is it the other way around?
HAS PURCHASE DEMAND HIT A BOTTOM YET?
It's still too soon to say, especially because it's supposed to be the summer buying season, but three consecutive weeks of index improvement is a start. We just have to hope purchase loan DENIALS don't rise right along with the increase in purchase loan demand. That whole qualification thing should raise doubts around any uptick in Pending Home Sales.
To read the full report click the link below.
http://www.mortgagenewsdaily.com/08042010_stolen_loan_demand.asp
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