Demand for Mortgages Hit 4 Year Low This Week

asphaltgambler · 08-03-2006, 09:08 AM

Washington Post today reported downturn in demand for first trusts and refi's..............to the level it was in 2002...................

What's next??

turbo6bar · 08-03-2006, 09:39 AM

YoY purchases down around 1/4. YoY refis down 39%. Also prepay (loans paid off) percentages are down, indicating that folks with ARMs are either 1) selling their homes, 2) living with the upward rate adjustments, or 3) letting the loan go into default.

Some gurus say a breakdown in MBA mortgage numbers will indicate a move towards a hard landing. If numbers level out or improve, then a soft landing is possible.

turbo6bar · 08-03-2006, 09:53 AM

FWIW, mortgage rates are down big the past two weeks. This will definitely help the market, but I doubt it will save it or bring new highs.

RANDY P · RANDY P's Garage

It's definitely thinning out there. Everyone is running "specials" on 0 down purchases.

I'm surprised rates have dropped like they have. Concernign the drop in biz, 2002 was also a decent year however. It's not like everyone struggled then.

rjp

MotoSook · 08-03-2006, 10:16 AM

What do you guys see happening with the mortgage rates in the next 3-4 years?

There was a huge buying rush, but surely the number of folks buying will diminish to some low number, right? It's not like folks are trading their homes in every 4 years.

With that in mind, you guys think mortgage rates will climbmuch? Or will it go down to entice buyers?

turbo6bar · 08-03-2006, 10:31 AM

Souk, do you have a crystal ball? Mine is broken. There's no telling where rates will go. The integration of economies on a global scale means the Europeans can and do affect the interest rates in the US.

Don't forget that terms without price are meaningless? If housing goes up by 15% per year and interest rates fall 1% per year, the monthly outlay is still greater. Central banks have been printing money at a torrid pace. That inflation has led to rises in all assets.

Some analysts are saying the bond bull market is ending. If they are correct, then we can expect to see higher fixed interest rates over the next decade. However, this is the easy answer, as rates have been at record lows for quite some time. There is a lot more potential for rates to go up than down.

My expectation is that rates will be similiar or slightly higher 3-4 years from now. 7-7.5% on the 30 yr fixed is my guess. Tempering the rise will be flat to falling housing prices. I don't know your intentions, but if I had to choose between buying now and 3 years from now, I'd opt for 3 years from now. If I am thinking about locking in rates now vs. 3 years from now, I'll gladly take today's rates and be happy.

MotoSook · 08-03-2006, 11:38 AM

Damn man...my crystal ball crapped out too, that's why I asked

I already own (mortgaged) a house, but there are things I'd like to do financially which hinge (my person risk-cost meter) on the mortgage interest rate. I would agree that there is a high probability that rates will increase since since they are so low compared to years past. I guess I better fix my crystal ball

cantdrv55 · 08-03-2006, 01:48 PM

A relative of mine bought a huge house in Napa a couple of years ago on an interest only loan. She just refinanced and is afraid of her mortgage. Said she might have to look into a 50 yr note if things get too rough. She's not really planning on paying off her house before she dies. I wouldn't be able to sleep if I knew I'd have to continue making such a big house payment when I enter retirement.

cbeers · 08-03-2006, 02:09 PM

She's in Napa!

She can drink her way to zzzzzzzzzzzzzzzzz......

-Chris

hytem · 08-03-2006, 07:13 PM

Mortgage rates are still low, in the 6% range, and have come down a bit since that Fed guy toned down his rhetoric. Somebody must have talked to him.

Right now, you have a nice balance between CD rates (about 5%) and mortgage rates. That's better than those 1% CD rates of some months back. The average taxpayer lost a bundle on those 1% CD rates. And the banks made a bundle.