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Started By
Message
Mortgage applications are dropping
Posted on 6/9/21 at 7:33 am
Posted on 6/9/21 at 7:33 am
Mortgage applications continue to drop.
Rates and costs have been catching up and the market is reflecting the slowdown in the pace of people taking out mortgages.
“
U.S. applications for home mortgages declined last week as refinancing dropped to its lowest level since February 2020 with fewer homeowners able to take advantage of lower rates during a holiday-shortened week.”
https://www.reuters.com/world/us/us-mortgage-applications-decline-with-drop-refinancing-mba-2021-06-09/
Mortgage applications drop
Rates and costs have been catching up and the market is reflecting the slowdown in the pace of people taking out mortgages.
“
U.S. applications for home mortgages declined last week as refinancing dropped to its lowest level since February 2020 with fewer homeowners able to take advantage of lower rates during a holiday-shortened week.”
https://www.reuters.com/world/us/us-mortgage-applications-decline-with-drop-refinancing-mba-2021-06-09/
Mortgage applications drop
4
Posted on 6/9/21 at 7:49 am to SlidellCajun
It seems like rates are dropping.
Posted on 6/9/21 at 8:53 am to C
quote:
It seems like rates are dropping.
They’re above the lows for the past 18 months but still at historical lows.
It appears to me that the market is actually working as it should. House prices get too high and a slowdown happens. This is much different from the perverted market in 08 when banks were loaning without proper collateral which created false demand.
People are now evaluating their desire to move based on whether they can actually find a better house and finding that the cost makes no sense.
The real estate market needs to cool off and it looks like that’s exactly what it’s doing.
Posted on 6/9/21 at 9:01 am to SlidellCajun
I'm curious if this takes into account people buying houses for cash?
Posted on 6/9/21 at 2:57 pm to Bawwitdabaw
No - this data comes from mortgages. Rates are great- Lower than this time last year. This will change. People have gotten accustomed to think they will stay this way because we have not seen many changes since March. As a result, many are not refinancing because they think they will drop.
People believe media headlines and their emotions more than the numbers. SOOO many people can advantage from this market by taking equity in their homes, refinancing to save ten of thousands or do a cash out an pay off REALLY high interest debt.
People believe media headlines and their emotions more than the numbers. SOOO many people can advantage from this market by taking equity in their homes, refinancing to save ten of thousands or do a cash out an pay off REALLY high interest debt.
Posted on 6/9/21 at 3:09 pm to SlidellCajun
It's looking like May was the peak - you could tell tons of people started listing their houses as a result of the price bumps, probably looking to downsize or change their living situation.
Seen a lot more sellers people price drop their houses on Redfin much more often in the last few weeks as opposed to a month ago.
Seen a lot more sellers people price drop their houses on Redfin much more often in the last few weeks as opposed to a month ago.
Posted on 6/9/21 at 3:20 pm to Billy Mays
Dec/Jan was the lowest this year. Many people are still out there with 4+% rates and do not realize the cost of waiting.
Additionally, because there is a known shortage of homes, equity will continue to go up. I can show borrowers when they make their equity back on an above ask price. It has always been less than 2 months.
Additionally, because there is a known shortage of homes, equity will continue to go up. I can show borrowers when they make their equity back on an above ask price. It has always been less than 2 months.
Posted on 6/9/21 at 3:28 pm to SlidellCajun
I think its time to short the homebuilders, or potentially use puts on them as a general market hedge. With housing shortages showing up in many places, along with high lumber costs and higher debt costs, I think the COVID-induced rush for new homes will be a high water mark for the industry. Even the stock chart of XHB is suggestive of significant demand being pulled forward from the future. I think we've crossed the peak and are now on our way down the other side of the hill.
Posted on 6/9/21 at 3:29 pm to TMFBB21
I don't understand all the ins and outs of it but the Fed has been buying mortgage bonds like crazy over the last year and now holds $2 trillion worth, around 30% of the total that's out there, and is plunking down another $40 billion for more mortgage bonds every month.
At some point this is going to slow or reverse and that should raise rates.
At some point this is going to slow or reverse and that should raise rates.
Posted on 6/9/21 at 3:57 pm to Diseasefreeforall
You are correct- Yields and 10 year treasury are in oversold territory right in the face of inflation concerns.
Mortgage applications are down Fed is out there buying MBS securities with two fists. Demand is down and they are still purchasing. This could all change very quickly. In August, the fed is meeting in Jackson Hole and we are expecting them to ease up on buying. As a result, we are hopeful rates will remain low but this could all change by the end of the year.
Mortgage applications are down Fed is out there buying MBS securities with two fists. Demand is down and they are still purchasing. This could all change very quickly. In August, the fed is meeting in Jackson Hole and we are expecting them to ease up on buying. As a result, we are hopeful rates will remain low but this could all change by the end of the year.
Posted on 6/9/21 at 4:07 pm to TMFBB21
If rates do rise as the supply of homes on the market gets back to what it was pre-covid we could see a real glut of homes for sale.
Posted on 6/9/21 at 4:18 pm to Diseasefreeforall
quote:
If rates do rise as the supply of homes on the market gets back to what it was pre-covid we could see a real glut of homes for sale.
Mortgage rates were in the high 3s low 4s on 30 yr in 2019, that’s the supply level you described and we didn’t have a glut of homes. I sold during that time, was still a sellers market pre Covid.
Posted on 6/9/21 at 5:07 pm to Dawgfanman
Hell ya, buying April 2020 when no one else was, refinancing the next year taking advantage of historical low rates. I'm finally a winner.
This post was edited on 6/9/21 at 5:08 pm
Posted on 6/9/21 at 8:22 pm to RedStickBR
I was thinking this too. . . But I do not think this will happen in the next month or two. On the subjects of your thoughts: I think we are looking at early next year, or possibly this year due to external factors in politics. If they develop some form of stimulus for infrastructure, it may create a bubble effect - as if we were not already there. Thus, kick the inevitable down the road.
My Reasoning:
People are looking to move out of the big cities now that working from home is a liable option, as well as escape the potential for riots and further unruly political policies that some are opposed to out of desire to have a normal life again. The prices just are not there for the families looking for a nicer home in the same area. Then again a $400k home in some areas is the equivalent a $4 million home in some of these big cities. Thus the prices that you and I see as inflated, others are thinking they have found a deal. I also think this will subdue any form of housing crash... HOPEFULLY. I do however think the governmental forbearance and magnitude of mortgages that are a minimum of 30 days past due will have an adverse effect. In Fact, I think a "housing crash will create the supply of homes that the typical family is looking for at the prices they desire, thus having a lesser effect. YET, THIS is when I would bet against home building developers. HOWEVER - it does not subdue my following side note.
The side note I found interesting: I will note that margin debt is at its all time high seemingly peaking. Every time it has reached this sort of pattern, a market dip was soon to follow as in one to two years time... or the old saying of "What goes up, must come down." The shares purchased on loan will likely be repaid with the increase in market value of the equity. The market eats the loss and pays for the correction. The likelihood of recovery could be 8 months, possibly longer depending on the severity. Thus, the overvalued equity is passed on to the market. The question is when will this come down back to reality? Being the market's value is deemed as overvalued by many basic fundamental valuation strategies, I believe this is where things will get interesting. Maybe the housing crash creates a ripple effect. Time will tell.
My Reasoning:
People are looking to move out of the big cities now that working from home is a liable option, as well as escape the potential for riots and further unruly political policies that some are opposed to out of desire to have a normal life again. The prices just are not there for the families looking for a nicer home in the same area. Then again a $400k home in some areas is the equivalent a $4 million home in some of these big cities. Thus the prices that you and I see as inflated, others are thinking they have found a deal. I also think this will subdue any form of housing crash... HOPEFULLY. I do however think the governmental forbearance and magnitude of mortgages that are a minimum of 30 days past due will have an adverse effect. In Fact, I think a "housing crash will create the supply of homes that the typical family is looking for at the prices they desire, thus having a lesser effect. YET, THIS is when I would bet against home building developers. HOWEVER - it does not subdue my following side note.
The side note I found interesting: I will note that margin debt is at its all time high seemingly peaking. Every time it has reached this sort of pattern, a market dip was soon to follow as in one to two years time... or the old saying of "What goes up, must come down." The shares purchased on loan will likely be repaid with the increase in market value of the equity. The market eats the loss and pays for the correction. The likelihood of recovery could be 8 months, possibly longer depending on the severity. Thus, the overvalued equity is passed on to the market. The question is when will this come down back to reality? Being the market's value is deemed as overvalued by many basic fundamental valuation strategies, I believe this is where things will get interesting. Maybe the housing crash creates a ripple effect. Time will tell.
Posted on 6/9/21 at 8:25 pm to Teddy Ruxpin
You had a win-win. Congrats. 
And here I was when I thought I got a deal on interest whenever I took advantage last year in April.
And here I was when I thought I got a deal on interest whenever I took advantage last year in April.
Posted on 6/10/21 at 3:31 am to Bawwitdabaw
quote:
I'm curious if this takes into account people buying houses for cash?
My question as well. Where I live anything under 1M you won’t get an accepted offer using financing. You have to be cash and then refi after close should you choose to do so. Last week one in my neighborhood went on the market had 26 offers in 24 hours
Posted on 6/10/21 at 10:03 am to ItNeverRains
Cash offers are not calculated in mortgage applications - the refinances would. But not a bad idea if you have the cash to put up front and then refinance/get a mortgage to free up your capital since rates are so low.
Posted on 6/10/21 at 10:29 am to CajunCraftsman225
Enjoyed your thoughts, thanks
Posted on 6/10/21 at 10:47 am to ItNeverRains
quote:
you won’t get an accepted offer using financing.
Then where are people buying that are using financing and not cash?
Posted on 6/10/21 at 1:29 pm to ItNeverRains
quote:
ItNeverRains
quote:
Franklin, TN
quote:
My question as well. Where I live anything under 1M you won’t get an accepted offer using financing. You have to be cash and then refi after close should you choose to do so. Last week one in my neighborhood went on the market had 26 offers in 24 hours
My bother lives there. You people are insane.
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