I find this stuff interesting so that is why I blog about it, but I know I am a geek sometimes. The above chart was taken from a Wall Street Journal article linked above.
The number of mortgage applications (shown above) has dropped to a 12-year low despite ALL of the stimulus packages available and the new home credits. At first blush this appears counter-intuitive but upon further scrutiny it makes total sense.
People who can refinance have already refinanced. With mortgage rates below 5% on a 30-year mortgage, those that have withstood the equity assault on their homes have been able to save some money by reducing their payments.
Others have negotiated with banks for relief but for the most part, the refinance boom has run its course for now until property values rise.
The other factor that is affecting refinances is the lack of control over appraisals and the scrutiny of underwriting by the banks. Most banks today are SO risk averse, they want nothing but 'A' paper with LOTS down. This presents a big problem for most consumers who have purchased their houses with little down in the last 10 years.
I don't see much relief in sight for the next year or two until employment and manufacturing picks up again.
Grace & Peace
PLW
No comments:
Post a Comment