Mortgage Rates Lower, Applications Rise, but the Housing Market is NOT Getting Better
Posted on | March 25, 2009 | 8 Comments
Mortgage rates continue to free fall to levels never seen before. The Mortgage Bankers Association (MBA) reports that 30 year fixed mortgage rates averaged 4.63% last week. Freddie Mac reports that average mortgage rates, at the most dependable lenders, dropped below 5% for only the second time in history. The MBA also reports that mortgage applications are up 32.2% for the weeking ending March 20th. Mortgage rates are at historic lows and applications are soaring, but the the housing market is not getting any better.
As I have stated several times in the last few weeks, the housing market WILL NOT get any better until housing supply equals demand. The only way that housing supply will equal demand is if Americans have the money to buy new homes. With the unemployment rate over 9% in many states, this is definitely not the case. What is even more disturbing is the fact that 78.5% of last weeks mortgage applications were for refinancing. From personal experience I know only the most elite borrowers in America are getting a rate under 5%.
There is absolutely no way that you will be considered for a rate under 5% unless you have a credit score over 800 and you have 20% or more equity in your home. If your home has declined in value over the last three years it is highly likely that you do NOT have 20% equity. Unless you have paid double mortgage payments of have lived in the home for over 8 years, it is very difficult for anyone to have 20% equity in their home in the current housing market.
Now that you realize these are the facts, what does it matter if applications are soaring? Many of those applications are the same individuals who attempted to refinance earlier this year. I would also guess that there is a large number of home owners who currently have SEVERAL applications pending. If you know mortgage rates are at historic lows, why wouldn’t you apply to a few different lenders?
Sadly, the media continues to fill Americans with what they want to hear; taking the lead from our President. Claiming that refinanings have never been higher and the dollar remains strong could not be further from the truth. It is quite possible that refinance APPLICATIONS have never been higher, but who is actually getting through the appraisal process? If you are in any major metropolitan city, your home has lost value. There are no housing markets that are immune to this disease of which the only cure is jobs.
It will be very interesting to see what the job data released on Friday, March 27 shows us. If we see further increases in the unemployment, it is likely that housing supply will not fall. We did see a drop from 14.6 months supply in January to 12.o in February, but this is still excessive and the uptrend has not been broken. To put this number into prespective, in Febuary of 2004 there were 3.7 months supply compared to the current 12.0. While it is highly unlikely we will get to that point anytime in the next 10 years, we still need to see months housing supply under 9 months to gain any footing in this struggling ecomony.
Please do not believe everything the media tells you. The current administration is doing everything possible to place blame on others. Ultimately, President Obama needs to continue to work on creating jobs. I give him all the create in the world for acknowledging that job stabilization and subsequent growth is needed. Well, President Obama, please work on this issue instead of going on ESPN to create a NCAA Tournament Bracket and the Leno Show to talk about your bowling adventures. We have bigger problems.
- Savings, NOT Credit, is the Lifeblood of a Healthy Economy President Obama
- Obama Mortgage Bailout Plan – 64% of Americans Feel it is Unfair
- Americans Against the Obama Mortgage & Housing Bailout
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8 Responses to “Mortgage Rates Lower, Applications Rise, but the Housing Market is NOT Getting Better”
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March 25th, 2009 @ 5:41 pm
[...] View original post here: Subprime Blogger / Mortgage Rates Lower, Applications Rise, but … [...]
March 25th, 2009 @ 8:13 pm
[...] Subprime Blogger / Mortgage Rates Lower, Applications Rise, but … Related Reading: Your Successful Career as a Mortgage [...]
March 26th, 2009 @ 2:47 am
Sadly, the media continues to fill Americans with what they want to hear; taking the lead from our President. -There we go. Not that I’m dissing Pres. Obama or anything. I still believe in most of his policies. It’s just that, from someone who knows how the media runs, I can safely say that ratings are being prioritized over credibility.
March 26th, 2009 @ 5:46 am
Jeez man, be patient!!! It’s gonna take 15 years!
March 26th, 2009 @ 6:19 am
Last week I was working on refinancing my home. I was approved for 4.75%. Am I stupid for not doing it then? I am holding out for 4.5% or lower. I’m in South Louisiana and have pretty good credit and pay my mortgage on time.
March 30th, 2009 @ 10:59 am
[...] There is currently 12 months of housing supply which is still extremely high. Unfortunately, the housing supply graph shows that we are still in an uptrend for supply. If people are losing their jobs and housing [...]
March 31st, 2009 @ 6:58 pm
[...] offer expires on April 30th, but if the housing market continues to show an increase in monthly new housing supply, we are likely to see many more [...]
April 5th, 2009 @ 4:21 pm
For you to say that only “elite” borrowers are able to get good interest rates on their homes, and to call them FACTS, are absurd. I do not have an 800 credit score, and I was able to lock in 4.8% just last week. Before you are going to say that your opinions are facts maybe you should do some research and post some real statistic first.