Mortgage Purchase Aps Realize a Precipitous Decline
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The MBA’s mortgage application index rose 3.2% on a seasonally adjusted basis the week prior to November 6. The week’s positive performance was derived entirely from the refinance index, which rose 11.3%, while the purchase index dropped -11.7%–reaching its lowest level since December 2000.
A wave of buyers, filling out multiple mortgage applications, that were looking to take advantage of the first time home buyer tax credit–originally set to expire on Nov. 30th–have already completed their transactions, thereby reducing the current demand for mortgages. However, the recent extension of the first time home buyer tax credit should eventually bring a new set of buyers into the market, which could help support the purchase index over the coming months–don’t forget buying a house can be a long drawn out process. Nevertheless, increased lending standards for FHA loans, due to the organizations worsening finances, could place some headwinds on the purchase index’s recovery. The refinance index remains robust as current home owners continue to take advantage of attractive rates.
This extension may be not good for all. We must really know if we actually can afford to pay and use this or just let it pass for now. Thanks for sharing. By the way, I know a real estate coach who could also help many in the real estate industry make money despite the current crisis.