With many Americans unable to amass savings (and Bernanke punishing those who try), and most seeing that the chance of their purchase immediately falling underwater, it's quite a conundrum as Mr. Greenspan would say. This is also a consequence of what would have been the current crop of home buyers who got 'pulled ahead' by the first time home buyer credit. (recall many of those folks resided in states who allowed the tax credit to be used in lieu of a down payment, hence put little to nothing down on their homes as well!)
But if Operation Twist comes to fruition, the first sub 4% thirty year mortgage rates in our lifetimes look to be the next game plan.
- U.S. home mortgage applications for purchases fell to a nearly 15-year low last week as resurgent worries about the strength of the economy kept buyers at bay, an industry group said on Wednesday.
- The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 2.4 percent in the week ended Aug.19. The seasonally adjusted gauge of loan requests for home purchases tumbled 5.7 percent to its lowest level since December 1996, the MBA said.
- "Another week of volatile markets and rampant uncertainty regarding the economy kept prospective homebuyers on the sidelines, with purchase applications falling to a 15-year low," Mike Fratantoni, MBA's vice president of research and economics, said in a statement. "This decline impacted borrowers across the board, with purchase applications for jumbo loans falling by more than 15 percent and purchase applications for the government housing programs falling by 8.2 percent."
- The refinance share of mortgage activity increased to 79.8 percent of total applications from 78.8 percent the week before.
It appears another factor wrecking havoc are appraisals.
- Many housing experts say low appraisals are yet another headwind for a housing market already suffering from a plunge in prices, high unemployment and tight credit. Lenders are forced to cap their mortgage loans at the value set by appraisers and buyers and sellers often can't agree on how to make up the difference with an original deal price.