In its weekly report on the state of mortgage-application demand in the U.S., the Mortgage Bankers Association (MBA) said its purchase index dropped 8.5% to 360.8, while refinancing activity slid 15.4% lower to 1,620.9. The purchase index hasn't been this low since the week of October 10, 2003. The group's index of overall mortgage-application activity declined for the third straight week, losing 11.6% to 533.9, hitting the lowest point since July 2006. These numbers were in the red even though borrowing costs have moved lower. Fixed 30-year mortgage rates averaged 6.05% in the latest reporting period, down 5 basis points to hit their lowest point since late November.
The MBA's smoothed-out four-week averages for its trio of indices also pulled lower. The overall market index lost 9%, the purchase index was down 5.9%, and the refinancing index was 11.8% lower on four-week moving average basis.
MBA chief economist Doug Duncan told Reuters that this weakness can be partially attributed to the Christmas holiday. "There's probably an exaggerated holiday effect in the most recent week's release," he noted. Holiday commitments and winter weather often make the period from Thanksgiving through the end of January a "dead spot in the industry." Not a day passes that I don't feel extremely lucky that our former house in suburban St. Louis sold on December 20. During a "dead spot" of a seriously challenged market. I'm still in a pleasant state of shock.
While the latest decline can be blamed on the holidays, Duncan also said weakness in the mortgage business should continued into 2008; so far, MBA expects the housing market to (finally!) bottom in the third quarter of this year.
Beth Gaston Moon is an analyst at Schaeffer's Investment Research.
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Reader Comments (Page 1 of 1)
1-03-2008 @ 6:07PM
Joe Cowan said...
Some people never learn. Advertising that loans are available for frivilous purposes are still abundant.