Posted on 09/23/2014 6:04:46 PM PDT by Lorianne
Mortgage originations for the first quarter of this year fell off a cliff. JPMorgan reported a decline of 71 percent, as I recall, and I think Citibank reported a drop of 66 percent. Now, the second quarter’s bloodletting has come in and the numbers are about the same… down more than 60 percent year-over-year, if memory serves and it often does.
Even credit unions went straight into the tank this year, originating an annualized $42.6 billion in real estate loans in the first quarter, down from $102.9 billion in the first quarter of 2013, according to an Nation Credit Union Association (NCUA) press release.
Black Knight Financial Services released in March that loan originations were down 60 percent year-after-year, declining to the lowest level since November of 2008. And on August 12th, Origination News ran the headline: “The Refi Boom is Officially Over – And Won’t return Soon,” explaining that Freddie Mac has finally recognized that the refinancing boom that ended last summer… has ended… last summer… and that home sales this year have remained “lackluster.”
The Mortgage Bankers Association released its first 2014 forecast last October, predicting $1.2 trillion in total originations for the year, but those numbers were revised down in January and again in May. The current forecasts are for $1.01 trillion in total origination volume for the year. Last year total volume was $1.8 trillion, and $1.1 trillion of that volume came in the form of refis.
And finally, HARP origination volume has been down a staggering 70 percent year-over-year with only one third as many eligible loans remaining as compared with 2013.
Estimates are that cash sales are running at 40 percent of sales, which combined with the data provided above, should tell you how few sales there actually are in the aggregate. My grandmother would say the mortgage industry is furchtbar, I would use a similar sounding word also beginning with the letter “F,” but we’d mean roughly the same thing.
Okay, so you’ve got the picture, right? Now, name another industry that’s ever seen year-over-year drops in sales volume like that. I’ve been trying to come up with one… maybe typewriter sales in 1996, 1987 or 1988?
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Glad I don’t do that any more.
If you think of the country as a sports team, you would obviously conclude that we need new players and a new manager, and probably a total overhaul of the organization. You would also likely conclude that the farm system or colleges we’re drafting from just aren’t providing quality players.
Time to change how we structure and choose our team.
If Obama was a republican this would be front page news.
These numbers couldn’t really be any worse, could they?
This makes sense and really isn’t that bad. This was a refinance boom, which is done to replace an old mortgage with a newer, lower interest rate mortgage. Now that rates are starting to go up, it makes no sense to refinance, so that part of the mortgage business dissappears overnight. From now on, in a rising environment, the number of mortgages will equal the number of houses bought, so the number will never get back up until rates start dropping again.
Obama has DESTROYED the American economic engine of success. He must have some Zimbabwe in him!
So....happy days are here again?
an a pinch of uganda via Idi Amin
It all depends. Everything comes and goes in cycles like a pendulum. For thirty years, interest rates have been slowly dropping. This causes some investments to do well, and others to do badly. Real estate exploded because of this, and government bonds did great too.
Now we are on the other side of that pendulum, and what worked in a falling rate environment will not work anymore. But what hasn't been good in a falling environment, is now back in style. Position yourself for rising rates, and happy days will be here again.
Mortgage Originations Are Down by 60-70% Year-Over-Year… But Everything’s Okay
Recovery Summer I tell ya.
Thanks for the advice.
But, shouldn't gold and silver prices be rising instead of dropping?
Obama’s at a fundraiser tonight.
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