2013: Mortgage Applications decline 66%

[JohnyMac]

It looks like mortgage applications declined 66% in 2013. The number matches a 13 year low. Check out these graphs...

From its peak in October 2012, mortgage applications have collapsed 66% and this week printed at new 13-year lows. Since rates started to crack on Taper talk in May 2013, mortgage applications have fallen in a one-way street (but hey, rising rates won't affect the housing recovery, right? remember 15% mortgages... as the usual bullshit meme goes, entirely missing the shift in house prices, affordability, and marginal price-setter). Of course, the usual 'seasonal' effect wil be blamed and recovery will re-blossom in the new year... except, seasonally this is among the worse drop in the last few weeks of the year in the last decade. Adding further salt to the wound of wealth generation, the refi index has dropped to a fresh 5-year low as the home equity ATM remains shut (having dropped 73% in the last few months).

[Well-Prepared Witch]

I'm not surprised - the numbers were seriously inflated with the refi boom that was extended and extended with the super low rates.  I'd be relieved except that the lower volume means I and many of my colleagues are now wondering for how long we'll have jobs! I'm also VERY interested in how the new Qualified Mortgage rules are going to affect lending.  Expect it to be much harder to get a loan this year.

[crudos]

Glad we jumped on getting a home when we did in 2012.

[JohnyMac]

All good points Wellie.

Also keep in mind that most folks have their retirement wrapped up in their homes. If they can't sell their house several things will happen:

1) They will drain their saving's to pay for up keep and taxes on a house they need to sell
2) They will not have the money from the sale of the house to either;
    A) Buy another, smaller house or
    B) Have money to turn back into the economy.

All of these scenarios are bad and will affect "the recovery" as small as it is. 

Crudos, I am happy you purchased your house when you did. I am sure the price was right and interest rates were low. I hope you took out a 15 year vs. a 30 year mortgage. If not, think about doing it while interest rates are still low. 

[Well-Prepared Witch]

We got a 30 year, but are paying it down more quickly.  Gives us more flexibility to pay extra when we have it, or just the normal payment if we don't.   We got our mortgage in 2012, too, and I'm glad we did it before rates started rising!  We seriously considered just paying it off at the minimum as our rate is just slightly higher than inflation, but we want to free up the monthly cash for when Mr. WPW retires.

[JohnyMac]

MrsMac and I have had two mortgages in our lifetime. Both were 15 year and like you and Mr WPW payed them off earlier- Both within 12 years or so.

With all of that said, I wish we could sell our house in RI. The taxes + upkeep is costing us about $1K a month with no mortgage. 

 

[JohnyMac]

This article speaks to the Christmas retail down turn along with mortgage application decline too but what is most important is the active graph at the end of the article. The graph shows the stock market 1928-1929 and what the stock market looks like today.

Bottom-line, the author is predicting a crash of the stock market in 2014 no later that the end of Q2. At which time loan rates are going to climb and as loan rates climb so will inflation and unemployment.

If you don't have time to read the whole article at least check out the active graph. SCARY! 

[sledge]

I agree that there is much to be concerned about.  Jobs are the answer, but in the spiral we're in I don't see them coming back anytime soon.  Remind me, what was the good thing we were supposed to get by sending most of our good paying jobs overseas?  Wasn't it lower prices?  Seems to me it only resulted in inflation of the cost of basic necessities.  You know, those things that would be inconvenient to include in the inflation index.