Posted on 02/23/2022 6:27:42 AM PST by Browns Ultra Fan
Alarm!
It is not surprising that applications for a residential mortgage have crashed and burned after The Federal Reserve’s announced intentions to raise their target rate and trim the ballast in the economic tanks. But dang!
Mortgage applications decreased 13.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 18, 2022.
The seasonally adjusted Purchase Index decreased 10 percent from one week earlier. The unadjusted Purchase Index decreased 6 percent compared with the previous week and was 40.4 percent lower than the same week one year ago.
Even worse, the Refinance Index decreased 16 percent from the previous week and was 56.4 percent lower than the same week one year ago.
While the average loan size did not increase this week, it remained close to the survey’s record high.
What The Fed giveth, The Fed can taketh away. Let’s see if Thurston Powell The Great Magician can raise rates and NOT crash the housing and mortgage markets.
(Excerpt) Read more at confoundedinterest.net ...
Don’t forget Blackrock.
On the bright side, my e-mail box is going to stop filling with those refi offers from Quicken Loans and others. Plus I am locked into a 2.75% APR fixed.
What’s the surprise? People don’t refinance when interests rates rise. Since 1992, I’ve been blaming the Federal Reserve for every recession since 1973. They haven’t once achieved a “soft landing” and in every instance, crashed the plane nose-first into the ground. (They don’t realize that the tool at their disposal, overnight lending, is like having landing gear on top of the plane.) But that doesn’t mean that the Federal Reserve needs to continually lower interest rates.
And it has not impacted the shortage of homes at this time.
The demand is still there. I’m in the market and it’s about impossible to find a house that doesn’t sell in a day
The real estate market was way over heated to begin with. Pouring a little water on in may not be a bad thing.
There is no way that the Fed will increase rates high enough to actually stop inflation. Currently, the federal funds rate is less than 0.1%. In the late 70s and early 80s, it took raising the federal funds rate all the way up to 19% to stop inflation. Raising the funds rate even a fraction of that amount would crash the entire U.S. economy, which is now dependent on extremely low interest rates and an endless supply of OPM (other people’s money) flowing out of the federal government.
Small rate increases, which is all that the Fed will do, will only give us Jimmy Carter style stagflation, delaying and exacerbating the inevitable crash. Inflation is only going to get worse until the economy crashes.
https://www.macrotrends.net/2015/fed-funds-rate-historical-chart
Yeh, there’s no houses to buy. Our neighborhood sells in one day with bidding wars. Lots of investors paying cash so no mortgage.
The housing and mortgage markets need to crash. They have gone out of reason.
“Let’s see if Thurston Powell The Great Magician can raise rates and NOT crash the housing and mortgage markets.”
They are mutually exclusive.
And rates need to go up .5% per quarter until the fire is out.
I hear a lot of investment came from China and outside of the USA. I’ll ask him. He did heavy refinancing but moved into something different when demand slowed down.
That’s the problem imo. Lack of supply and/or overpriced homes. The rich and wealthy are snapping them up as they are already set to close a deal in a day. If you can’t find, or afford, a home you won’t fill out a mortgage application. That is why the applications are down. IMO.
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