Purchase Mortgage Applications Drop 7.1%

From Reuters:
US home loan demand fell despite lower rates

“U.S. mortgage applications fell last week, driven by a steep decline in home purchasing loans even as interest rates dropped, an industry trade group said on Wednesday.”

“The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended May 19 decreased 6.0 percent to 552.6 from the previous week’s 588.0.”

“The MBA’s seasonally adjusted purchase mortgage index fell 7.1 percent to 396.4. The purchase index — considered a timely gauge of U.S. home sales — was also below its year-ago level of 482.3.”

“Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.61 percent, down 0.05 percentage point from the previous week, which was its highest level in nearly four years.”

“Fixed 15-year mortgage rates averaged 6.23 percent, down from 6.26 percent the previous week. Rates on one-year adjustable-rate mortgages (ARMs) decreased to 6.02 percent from 6.07 percent.”

“The ARM share of activity rose to 30.5 percent of total applications last week from 29.9 percent the previous week.”

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64 Responses to Purchase Mortgage Applications Drop 7.1%

  1. grim says:

    From Bloomberg:
    U.S. MBA’s Mortgage Applications Index Fell 6% Last Week

    The Mortgage Bankers Association’s index of applications to buy a home or refinance an existing loan dropped 6 percent to 552.6 from 588 the prior week. The gauge of purchases fell 7.1 percent, also the biggest decline in three months, to 396.4.

    “The housing market is coming down fairly sharply,” Robert Mellman, an economist at JPMorgan Chase & Co. in New York. “We should be stabilizing at lower levels of home sales and housing starts. Overall, economic growth is slowing.”

  2. I wonder what the NJ/NY data is

  3. Richard says:

    sit back and watch as the fed raises short term rates another 50-75bps before pausing. that should push the 30-year fixed near/north of 7% and money market accounts to 5.5% thus further incentivizing savings and eroding the housing market.

    IMO one needs 6-9 months of a seasonally adjusted flat trendline to claim any sort of ‘soft landing’.

  4. Anonymous says:

    via Jersey Shore Bubble blog-

    here’s a link to Dwek’s properties:


    I did a rough count. It looks like at least 300! Wonder how much the banks will want for them?


  5. Anonymous says:

    The new home sales numbers just released show a larger than expected jump in number of new homes sold.

    How is this happening if the purchase mortgage applications % is dropping?

  6. Anonymous says:


    Sales of New Homes Jump Unexpectedly

    “The pace of activity caught economists by surprise. They had been expecting a decline in sales, reflecting the fact that mortgage rates have been climbing in recent weeks and now stand at the highest level in nearly four years.”

  7. Anonymous says:

    Tomorrow you will see the same decline in existing home sales data as well.

    The fed is done raising rates. Even now, the 2 year note rates are not up to the fed funds rate of 5 %. All that is going on is a lot of jawboning & posturing about inflation.


  8. RentinginNJ says:

    How is this happening if the purchase mortgage applications % is dropping?

    Three possibilities that I can see:
    1)New home sales makes up less than 20% of the total home sales market (roughly 1.2 million units versus 6.6 million existing units). Builders have been aggressive about unloading inventory, while existing home sellers have been more reluctant to drop prices. Growing new home sales could have been offset by weakening existing home sales.
    2)Slowing refi’s as the housing ATM runs dry and borrowing costs are near 4 year highs.
    3)The new home sales data could simply be wrong. There is a significant margin of error around this prediction.

  9. Anonymous says:


    On your first point, yeah, I don’t know to many homeowners that are throwing in large flat panel HDTV sets with the purchase…you’d have to pry that from the guy’s cold, dead hands first…


  10. RentinginNJ says:

    “The pace of activity caught economists by surprise. They had been expecting a decline in sales, reflecting the fact that mortgage rates have been climbing in recent weeks and now stand at the highest level in nearly four years.”

    One of the incentives offered by a number homebuilders is below-market mortgages. Essentially, they will buy down points on your behalf. Another “smoke and mirrors” way of lowering the cost of a new home without actually dropping the price.

  11. Anonymous says:

    Grim –
    Why not post a link on New Home Sales numbers also?

  12. Anonymous says:

    Is it possible that the new home sales number are not seasonal adjusted. I am a little confusing with price increase. If the builder gave more incentive, how is possible the new home price are increasing.

  13. Anonymous says:

    grim should post the article on new home sales in front and start a new thread.
    i think it deserves the same attention and it will also generate more traffic.

  14. Anonymous says:

    I agree…I’m sure a lot of people will want to weigh in on those numbers.

  15. Anonymous says:

    Grim might be filtering it out again

  16. RentinginNJ says:

    If the builder gave more incentive, how is possible the new home price are increasing.

    “Prices increasing” is actually a bit of a misnomer. The prices statistic given is median sale price. This doesn’t account for quality of the home sold.

    Think of it this way; the median price of all TV’s sold by Best Buy last weekend was $1,000. This weekend they have a 10% off sale on all televisions. Does this mean that this weekend the median price of TV’s actually sold will drop to $900? Probably not. In fact, it’s entirely possible the median sale price could actually rise. People would just be getting more for their money.

  17. Anonymous says:

    How can we compete?….Headline News –
    WASHINGTON (Reuters) – Sales of new U.S. homes defied predictions of a slowdown in April and rose 4.9 percent while prices climbed, although the supply of homes for sale hit a record, a government report showed on Wednesday.

  18. Anonymous says:

    rentinginnj –
    what a great analysis. awesome!

  19. Anonymous says:

    I heard that they just revised down the February new homes sales number to make the March number look like a bigger increase than it actually was. I wouldn’t put it past them to pull something like that.


  20. Anonymous says:

    It is amazing the twists and lies the media is reporting the public -Since when do they treat this like tabloid info. and run with it. Don’t they look to see the real facts? Unbelievable.

  21. grim says:

    To all the Anonymous hecklers,

    If you’d like to pay my salary, I’ll be glad to post everything as soon as it happens. But until that happens, I still have a job, and unfortunately, that job takes priority during the hours of 8 to 5.

    As it is, I get up half an hour earlier in the morning to make sure there is at least one or two posts up for the early risers. During the day I usually skim the news and will post it up when I’ve got a few free minutes. When I get home from work I spend at least another hour posting things up.

    My current going rate is $150 per hour. So if you’d like a dedicated hour of my time I’ll gladly post my paypal account up.


  22. Anonymous says:

    Are the new sales # from homes with new contracts or older contracts that are just now closing?
    I still don’t buy it – but this is a great incentive for the realtors and sellers to keep those prices at all time highs.

  23. Anonymous says:

    Actually, had they not revised down the February number, the number they just reported would have indicated a DROP in new homes sales! What a pathetic sham…

  24. I think it is quite obvious that there is no real estate bubble and that those who didnt purchase years ago missed the boat to buy a house and must admit to themselves that houses appreciate in value. No one wants to admit that!

  25. RentinginNJ says:

    Lets dig a little deeper into these numbers:


    YOY Sales down 5.7%
    YOY median price down from $240,900 to $238,500.
    Prices only went up since last month because the price drop from February to March was so big (6.6%).
    YOY Inventory up 27%

    For the Northeast:
    YOY Sales down 33%

  26. Anonymous says:

    …”Grim might be filtering it out again”… Don’t worry – we know this is from some realtor or seller – most of us are here b/c we want the truth and can spot a lie when presented with it.

  27. Pat says:

    RE: Paying grim’s salary

    Hey, Mr. Grumpy Gills, sorry, no can do. It’s just too hard to prove you have the right to work in this country.


  28. Anonymous says:

    If you don’t mind my asking – what’s your job? How do you get away with maintaining this blog (posting, replying, emails, etc) while you’re on the job?
    Just curious.

  29. Anonymous says:

    minutesfromnyc – I don’t feel I “missed the boat” – I just don’t want to over pay for a house! I think today’s new housing numbers are false. I don’t see any “under contract” or “sold” signs around.

  30. pesche22 says:

    im going to have my cojote do my house search for me.

  31. Anonymous says:

    House prices about to plunge off the cliff.

    Papapapapa PANIC will set in.

    Babababababa BOYCOTT!

    NO MAAS to greedy sellers/starving one-way realtors



  32. Anonymous says:

    It’ so typical with this blog where articles and news reports that are considered “positive” for the pro-bubble-burst are readily available and embraced as facts.
    On the other hand, anything contrary are quickly dismissed and given the conspiracy spin.

    Who’s really in denial?

    …and by the way no I’m neither a realtor nor a seller. Just somebody trying to be as objective as possible. Not surprisingly only one side is taken seriously on this blog.

  33. Anonymous says:

    anon 2:44
    don’t worry you’re not alone with that sentiment. not everyone here is as one-sided as the posters. some of us go through it with an objective eye and don’t bother posting if only to avoid being labeled a realtor ;)

  34. Anonymous says:

    To the Realtors –
    check out the name of this blog. what do you expect?

  35. pesche22 says:

    anyone who even thinks that this real estate market has bottomed
    is a moron or a fool.

    and dont forget Vincete Fox arrived
    in the US for a Visit yesterday.

    My cojote is coming over for dinner

  36. pesche22 says:

    do you think Toll Brothers would make you sign as a non flipper today?

  37. Anonymous says:

    The starving realtors coming to visit us?

    Bring it on realtors!
    Keep up the chatter cuz the buyers are in control now. Start kissing up!

    Boycott overinflated Houses!



  38. Anonymous says:

    Your allegiance is to Buyers now or starve realtors.

    So start getting “SUBSTANTIAL” price cuts like 25% lower and just maybe a few just a few buyers “may” emerge.
    But for now STARVE!

    Boycott Bidding On houses!



  39. Anonymous says:

    I feel down 33% is where we are going to see resistance. If you look at most markets the last ~33% increase has been drastic.

  40. Anonymous says:

    I can’t believe anyone would write in this blog that there is nothing wrong with the housing market today. You must have your kitchen wallpapered with Pets.com stock certificates!

  41. Anonymous says:

    anon @ 2:44 ..

    I will read you articles if you posted them.

  42. Anonymous says:

    anon 2:44
    … or do you want to sell your house in the future to fund your retirement?

    If i pay more, my retirement plan goes down the drain.

    If you sell for what i believe is fair value, your retirement plan goes down the drain.

    Do I like to buy a house?
    Definite yes

    Would i like to buy a house at the cost of my retirement plan?
    Hell no

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