Posted by Anonymous on 12/14/05 12:12pm
Msg #82488
US mortgage applications fall on refinancing drop...
....and so it goes.
US mortgage applications fall on refinancing drop
Wed Dec 14, 2005 12:49 PM ET
By Julie Haviv
NEW YORK, Dec 14 (Reuters) - U.S. mortgage applications fell last week, dragged down by home refinancings slumping to a 17-month low as interest rates clung near the highest levels of the year, an industry trade group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended Dec. 9 dropped 5.7 percent to 619.3 from the previous week's 656.7.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.28 percent, down 0.04 percentage point from the previous week's 6.32 percent.
The 30-year fixed-rate mortgage, the industry benchmark, is substantially above its 2005 low of 5.47 percent in late June and close to its 6.33 percent high in the week of Nov. 11.
U.S. home sales have remained historically high despite rising mortgage rates. On the other hand, less refinancing should eventually rein in consumer spending, analysts said.
"Although home buying remains relatively strong -- albeit off its most robust levels -- refinancing activity has slumped," said Steven Wood, chief economist at Insight Economics.
"Less refinancing activity should dampen consumer spending -- although that has not yet occurred," he said in a research note.
The Mortgage Bankers Association's seasonally adjusted index of refinancing applications dropped 9.7 percent to 1,441.8, from 1,596.4 the previous week. Volume was at the lowest level since the week ended June 25, 2004, when the index reached 1,386.9.
The MBA's seasonally adjusted purchase mortgage index also fell. It dropped 3.5 percent to 477.9 from the previous week's 495.1. The index is considered a timely gauge on U.S. home sales.
Analysts and economists say the steady climb in interest rates in recent months may have started cooling rate-sensitive areas of the economy like housing.
"Some sectors of the economy may be slowing down. The housing sector may be doing just that," said Jon Basile, an economist at Credit Suisse First Boston.
The MBA's survey covers about 50 percent of all U.S. retail residential mortgage originations. Respondents include mortgage bankers, commercial banks and thrifts. (Additional reporting by Richard Leong)
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Reply by Paul_IL on 12/14/05 12:40pm
Msg #82495
What you seem to forget is that refi's were at an unnaturally high number previously due to record low interest rates. They are now falling to a more normal rate. There will still be large numbers of homeowners that will be taking the equity out of their homes, consolitating debt, sending kids to college etc....
What this means is those easy money seeking SA's that the NNA keeps cranking out will not be getting the work they anticipated and will be gone like the dinosaurs. The professional SA's that have cultivated relationships with lenders and title companies will be just fine. Wonder which category you fit within?
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