Posted on 07/14/2010 5:27:25 AM PDT by Rational Thought
Demand for loans to purchase U.S. homes sunk to a 13-year low last week, and refinancing demand also slid despite near record-low mortgage rates, the Mortgage Bankers Association said on Wednesday.
Requests for loans to buy homes dropped 3.1 percent in the week ended July 9, after adjusting for the Independence Day holiday, to the lowest level since December 1996, the industry group said.
Refinancing applications fell 2.9 percent, and the mortgage market index that reflects total loan demand also fell 2.9 percent.
Average 30-year mortgage rates edged up 0.01 percentage point to 4.69 percent, but were near the record low of 4.61 percent set in March 2009, based on MBA records dating back to 1990.
Rock-bottom borrowing costs are helping borrowers with pristine credit to buy and those who still have equity in their homes to refinance. But high unemployment and foreclosures remain major hurdles, and worries that prices could dip further are also keeping many potential buyers on the sidelines.
(Excerpt) Read more at cnbc.com ...
I haven't seen either to be a big problem for my borrowers. I do see a lot of people who should be refinancing and just need to pick the phone up and haven't yet.
These are people that I can easily get approved.
I think people have been reading too many headlines, and just are afraid to even call.
I had a friend tell me the same thing. Same situation, husband has been out of work for 2 years. I have a question for you...were your friends (like mine) white?
My husband and I were considering buying a house for our son in the town where he attends college, and we called the company that did our refi last year (ugh!). Anyway, she said there were no more piggy-back loans being offered and that's what is getting people who are trying to buy. No one can afford the down payment. Here in Texas, at least, people are reluctant to refi because of the associated costs (Title fees are ridiculous). It takes a long time to recoup those costs and I'm at 4.99 now (in a 7 year ARM---thus the UGH). But it cost us $4,000 to do it. If we refi AGAIN, we are losing equity we can't afford to lose in this market. We hope to move before the ARM is up (kids will be out of college, we will be downsizing so they won't come home!), but there's no assurance the market will be back in 6 years, so we may be screwed.
That is what I think is crazy. The $8000 tax credit for first time home buyers and the $6000 +/- tax credit for existing home owners ACTUALLY WORKED. It sold houses. So why not extend it ?
When you compare it to other parts of the stimulus package that were just wasted on stupid things that DID NOT stimulate the economy you have to wonder why the would not continue a program that actually was effective.
Keep in mind housing stimulates the economy much more than just selling the house. People also end up buying lots of other things for that new residence(flooring, window treatments, cabinets, lighting,landscaping, etc, etc). This is why housing starts and permits are watched so closely by economists. It is a huge part of the general economy.
The fact is TAX CREDITS always work. Plus you have to actually PAY TAXES to get the money back. That means it helps the middle class more than any other segment of the population. Appliances sold like crazy when there was a tax credit on them. Wood stove and pellet stove sales are up because of the 1/3 credit on them. Cash for clunkers sold a lot of cars. Maybe because these credits don’t really help the poor or rich is the reason they were not extended.
They just aren't loaning.
Subsidizing housing is largely how we got into this mess. Yes, I get your point, it did work. I’m just saying it’s not the sustainable way to go.
US Home-Buying Applications Haven't Been This Low Since Clinton Was in Office
So you know what that means . . . Bush's fault.
That's where the stated income programs worked well; but they were unfortunately abused.
My wife and I just bought an existing house three weeks ago. We’ve been very fortunate in that we sold a townhome we had lived in for 10 years and upgrade to a house we wouldn’t have bought if it hadn’t been for such a depressed market.
For people that can qualify, this is a great time but it’s not ideal by any means. I still don’t think we’ve seen the bottom yet but I don’t think we’re far off as I don’t see how rates can go much lower without the whole market failing. If that happens, unless your mortgage is paid in full, you’re screwed. ‘Fun’ times we live in now.....
Texas requires a new title insurance policy every time you refinance (at around $1200 a pop), even if the house hasn’t changed hands (to check for mechanics liens, I guess). We paid points to buy down to our interest rate. $4,000 is a guess, but it’s about that much every time we’ve refinanced in TX and we’ve done it 3 times now. (on two houses) I shopped around, and it’s a racket here because of the title insurance mostly...and the points. Even on ‘no closing costs’ loans, you’re still out $3-4k in TX and because no advertised interest rate is ever what it says unless you pay points up front. And we have excellent credit.
Interesting to know; that’s a lot of money for title work. I think I have done 2 loans in Texas since I have been doing this.
Title costs where I am at are about $150 for a refinance.
Actually, these were refundable tax credits.
I’m in Texas. I bought on a VA loan a little over a year ago at 5.25% fixed. I tried to refinance to get 4.5% but the new rules for VA Streamline Re-finance now is you have to have 10% equity. Having just bought there is no equity. Plus the closing costs would be around $6,000 on a $150,000 loan. To lower the payment $50 a month would cost be 10 years to get that $6,000 back.
The mess was created by forcing banks to give loans to people that could not afford to make the monthly payments.
UNEXPECTED!
Be happy with your 5.25 %. There are many of us who once had mortgages of with 10-15 % interest rates back in the 1970’s and 1980’s.
My first was 10.75 %.
I pulled up our VA streamline guidelines and they do mention Texas specifically, but I see nothing saying 10% equity is needed.
They do have specific guidelines about cash out transactions( basically not allowed in Texas), (or even subordinating a 2nd lien which was cash out).
Out of curiosity I have emailed a underwriter about the question on needing 10% equity.
Why, the Obama Economics Institute (OEI) just geometrically proved beyond a shadow of a doubt that without the declaration of the U.S. economy would be in a depression, rather than simple a recession. The OEI now scores the Obamunists as having prevented two depressions in a row, within a period of just 14 months, a new world record!
Thanks, the loan officer is a good friend and she was shocked when the underwriter told her the VA streamline required a 90% LTV.
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