A few days ago, I noted that 30-year mortgage rates had risen sharply.
Today, we got the first hard-nosed proof that the surge has indeed hurt loan applications. According to the Mortgage Bankers Association, total home loan applications shrank to the lowest level since November last week.
Right now, Washinton seems to be taking a wait-and-see approach on the recent rate rise, but I don’t see how they can let this trend continue for much longer. Nor do I see how they can really stop it forever, of course.
In fact, what has been created is a vicious cycle of market manipulation … a negative “real” market reaction … ad infinitum. Place your bets on who will win in such a scenario!
Related posts:
- The problem with housing “solutions” … I just finished reading this story on CNN about a foreclosure court in Fort Myers, Florida. The story explains that this...
- Another bump on the road to a housing “recovery” … Just wanted to post a quick note following up on some of the housing comments I’ve made both here and in...
- Good Thing the Stock Market Isn’t Run by Real… I came across an article on Yahoo Finance this morning, talking about how buyers should approach the current real estate...
{ 2 comments… read them below or add one }
Did Washington stop taking a wait and see attitude today? Is that why the bond auction was better (according to the media) than expected?
Nilus Mattive Reply:
June 12th, 2009 at 9:24 AM
What has people somewhat optimistic about the recent 10-year auction is that foreign buyers showed interest … of course, they also demanded interest!
About 49% of the bonds went to foreign bidders, but 46.85% of the bonds also went out at the high yield mark of 3.99%.
A 10-year yield of 4% isn’t going to being mortgage rates back down where they “need to be.” In fact, a quick scan of 30-year rates today shows an average of about 5.7%!