Mortgage Bankers Weekly Update: Loan Apps Decline
Mortgage Bankers Association for the week of 12/23/2009
Market Composite Index: (loan application volume) decreased 10.7 percent on a seasonally adjusted basis from one week earlierRefinance Index: decreased 10.1 percent from the previous week and the seasonally adjusted Purchase Index decreased 11.6 percent from one week earlier.
Purchase Index: decreased 13.4 percent compared with the previous week and was 32.7 percent lower than the same week one year ago
Refinance Share of Mortgage Activity: increased to 75.9 percent of total applications from 75.2 percent the previous week.
ARM Refinance Activity: decreased to 3.8 percent from 4.1 percent of total applications the previous week.
MBA outlook: (Excerpted from mbaa.org)
In summary the MBAA sees another year of high employment, rising home sales and prices beginning to stabilize. But continued weakness in the job market and excess supply and shadow inventory will slow any recovery in the housing market.
The MBAA sees unemployment rate at about 10% at the end of 2010, and core inflation rates of below 2%. Fed rate is expected to remain at its current level throughout 2010.
But, property values will not recover until unsold inventory returns to normal levels. Affordability is at record levels, yet there is no strong indication that the demand recovering. People do not yet seem to trust the recovery and many do not have the necessary down payment or can clear tighter loan qualifications
The MBAA site economic report indicates a fragile recovery, but makes note that without credit the recovery remains tepid at best. The site makes note: Smaller businesses and consumers are heavily dependent on banks for obtaining credit, and there is little evidence that, as yet, banks have loosened the purse strings.
Bank loans to businesses and consumers are still falling with few signs of stopping or slowing down. Part of the decline is declining demand, but the fall is too large to be explained by weakness in demand alone. The banks are simply not yet stepping up to fill the vacuum.
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