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Mortgage applications sink to 12 year low

Shared by Niicss on Mon Nov 23, 2009 2:35 am
Though President Obama signed a legislation extending the first time homebuyers tax credit earlier this month, mortgage applications have fallen to a 12 year low. The Mortgage Bankers Association's index of applications has dropped by 4.7% in the week ended Nov. 13. It is the lowest level since November 1997. The main reason for the low mortgage applications have been attributed to the mounting unemployment. However, Fannie Mae, in one of the announcements, has stated that the three-year housing slump may end in 2010. They have expected that there would be an 11% jump in property sales as the recession is "unofficially" over. Source: http://www.bloomberg.com/apps/news?pid=20601206&sid=apScKL4f_o6c

Community Members Opinion

sara

Joined: 05 Jul 2006

Moderator
Posts: 2699
Location: New Brunswick, New Jersey

497.27 Dollars($)

Posted: Mon Nov 23, 2009 3:12 am Post subject:

Apart from the extension and expansion of the first time home buyers tax credit, the borrowing costs have also declined. The average rate for a 30 year loan with a fixed rate has dropped from 4.90% to 4.83%. However, it has still not increased the mortgage application rates rather it has dropped to a 12 year low. I agree that the main reason for the low mortgage applications is due to the severe unemployment prevailing in the market right now. A recent survey has stated that the number of jobless people may increase further in the first half of 2010. Also, due to the severe unemployment, even the foreclosure filings have increased as it has become tougher for homeowners to pay their dues.

savior70

Joined: 25 Mar 2009

Posts: 1895
Location: Florida

261.84 Dollars($)

Posted: Mon Nov 23, 2009 4:13 am Post subject:

Hi, Rising unemployment and dropping real estate values are two of the main reasons why the mortgage application reached the lowest level in 12 years. Job losses and pay cuts are still haunting the borrowers as they struggle to stay current on mortgages and pay monthly bills. With many borrowers being delinquent on their mortgages, the number of foreclosures is all set to rise in the next few months. However, with the much anticipated extension of the first time buyer tax credit till April, 30, the number of mortgage applications is expected to rise. Moreover, those who are not the first time buyers, but have owned a house within the past 5 years, will also be able to claim a tax credit of $6500. This is also expected to allure even more homebuyers. But things have not been very optimistic recently and it is yet to be seen how this extension can help revive the demand for home mortgages in coming months.


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