Mortgage applications to buy homes hit 14-year-low

[marmar]

By Amy Hoak, MarketWatch


CHICAGO (MarketWatch) -- The number of mortgage-loan applications for home purchases dropped to its lowest level in 14 years last week, the Mortgage Bankers Association said Wednesday.

Application volume for mortgages to purchase a home sank a seasonally adjusted 3.1% for the week ending July 9, compared with the week before, pushing volume to its lowest since December 1996, the MBA said.

Meanwhile, applications for mortgage-loan refinancing fell a non-seasonally adjusted 2.9% for the week ending July 9, compared with the week before, according to MBA's weekly survey. Refinance applications were almost 79% of all applications.

The MBA survey, conducted since 1990, covers about half of all U.S. retail residential mortgage applications. The MBA made an adjustment to the survey to account for the July 4 holiday.

One reason for the plunge in purchase applications: The disappearance of the home-buyer tax credit, said Greg McBride, senior financial analyst for Bankrate.com.

"The expiration of the home-buyer tax credit really spelled a big change for prospective home buyers," McBride said. "The tax credit pulled a lot of sales from future months into the March/April time frame, and now we're paying for that." ...........(more)

The complete piece is at: http://www.marketwatch.com/story/mortgage-applications-to-buy-homes-hit-14-year-low-2010-07-14

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1. Recommend

[Bragi]

2. It's what happens when you apply credit-worthiness tests

Especially after a decade or two of reckless lending to sustain the highly profitable trading in weird derivatives, followed up closely by the near-collapse of the financial sector leading to an economic depression.

[TwilightGardener]

3. Read the comments, I love all the advice to not buy a house, because

prices may go down further. That's great, if you only view a home as an investment, and not a nice place to live and raise your family for the long term. Interest rates historically low, too--I'm going to buy, because I have a family to raise, and pets, and I don't want to live in a shitball apartment or pay rent on a house (and thus someone else's mortgage, instead of my own). The trick is, one has to plan to be in the home over the long haul. Can't re-sell within 5 years anymore and expect to make a profit or even recoup your money.

[n2doc]

4. It really comes down to rent vs. mortgage

Which is financially better? If it is a lot cheaper to rent, or one feels that they will need/want to move in the next 5-10 years, then rent. If you think you will be in a town for longer, and mortgage is around the same as renting, then the tax break and stability make it worth buying.

[TwilightGardener]

6. I agree with that to some extent--if rent for a decent place is cheap (and by cheap

I mean 2/3 or less of mortgage equivalent on a non-money-pit non-fixer-upper) and you use that time to sock away the difference to pay down debt, build up savings, etc., OR if you can't stay put for years, then rent is probably better. For me, I would have to rent a house to be happy (need a yard, garden, room for pets, kids, hobbies), and rent on a decent home in a decent neighborhood where I'm at is fairly close to a mortgage payment. It's not all a math equation, it's quality of life that needs to drive the decision.

[Fastcars]

7. I have heard and read

That even with equal payments that it is sometimes more fiscally responsible to rent. If you aren't going to be in the house long enough to build equity, usually 4-5 years, you may as well rent. Of course the interest rate you can qualify for and how much it costs to originate a mortgage affect how long it takes to get to the break even point.

There are other costs associated with ownership that also have to be factored in. Taxes. Upkeep. Depreciation (in this market)....

[closeupready]

5. I predicted this.

Do a search.