Posted on 05/29/2024 8:18:01 AM PDT by Kaiser8408a
The thrill is gone …from the US mortgage market.
Mortgage applications decreased 5.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 24, 2024.
The Market Composite Index, a measure of mortgage loan application volume, decreased 5.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 6.3 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 10 percent lower than the same week one year ago. And -40% under Biden.
The Refinance Index decreased 14 percent from the previous week and was 12 percent higher than the same week one year ago.
It is still an unfavorable time to buy a home!
From the film “Ronin” that sums up actor Robert DeNiro in one sentence.
Spence (Sean Bean): “You know, you think too hard.” Sam (Robert DeNiro): “Nobody ever told me that before.”
How would DeNiro consider the 40% drop in mortgage purchase demand under Biden?
(Excerpt) Read more at confoundedinterest.net ...
This is HOW inflation comes down. Monetary policy works with long and variable lags. One of the channels through which it acts is in the mortgage market, slowing demand for housing, slowing price hikes.
“It is still an unfavorable time to buy a home!”
What can a family that needs a $400,000 house but can only pay $300,000 do?
Buy the house with an affordable $300,000 mortgage and agree to give the seller an assignable option to buy it back at say $350,000 (in devalued money) 18 to 22 years in the future when it most probably will be worth at least $600,000 to $900,000 (in devalued money).
What will Mr. & Mrs. Buyer do when the option is exercised say in 2045 and their kids have flown the coop?
Buy an affordable condo.
“Monetary policy”
I scanned in old brokerage statements about a year ago. The pre-Obama interest rate hike was short-lived.
No sane person who can avoid doing so is going to take a massive financial hit because of a short-term interest rate spike.
Mortgages with seller/parent interest rate buydowns are also possible.
They would get $300,000 (less real estate commission) now.
The family would be wise to buy up the option in the near future if it can - maybe when interest rate fall enough.
“Normal people selling houses want money NOW.”
The family can hope the seller/sellers is/are your type of “Normal people”.
“Monetary policy”
There are lots of fairly young people that got rich in stocks like Amazon, Apple, etc.
Higher interest rates will only scare them into being willing to pay even more for houses.
The stock market has a huge valuation. Governments have promised huge pensions. The only way to fund those pensions is probably via the stock market, so the stock market will continue to be fed with tax dollars.
On the other hand, a nice area might only have ten million-dollar mansions up for sale.
Reality is what it is generally for substantial reasons.
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