Mortgage applications decline in 4 of past 5 weeks
Bloomberg News
Originally published January 30, 2005
Mortgage applications have fallen for the fourth time in five weeks, reflecting declines in home purchases and refinancing, a private group's survey found. The Mortgage Bankers Association gauge dropped 3.6 percent to 658.1 in the week that ended Jan. 21 from 682.9. The group's purchase index fell 2 percent to 439 and the refinancing measure decreased 5.7 percent to 1932.8.
Both indexes are below last year's averages and suggest the economy won't get as much of a boost from refinancing and home sales this year as it did in the prior two years.
"The housing market's success in 2004 will partially impinge upon its potential success this year," said Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio. "I see a very gradual reduction in activity."
The mortgage bankers survey covers about 50 percent of all retail residential mortgage originations and has been conducted weekly since 1990. The base period is March 16, 1990, when the value for all indexes was 100.
Thirty-year mortgage rates below 6 percent helped make 2004 a record year for home sales. Economists said that though rates are rising, they will likely remain relatively low.
The Federal Reserve's Open Market Committee is expected to raise the federal funds rate a quarter point to 2.5 percent when it meets this week, based on the median forecast of economists surveyed by Bloomberg News.
"Low inflation and the expectation that the Fed will be able to keep inflation low are two reasons to expect that long-term interest rates will remain low," said Stephen Gallagher, chief economist at French bank Societe Generale in New York.
Gallagher predicted that 30-year fixed mortgage rates will rise to between 6.25 percent and 6.5 percent this year.
"When mortgage rates move above 7 percent, we should start to see zero price appreciation," Gallagher said. "That's when the housing market should really develop some weakness."
Refinancing applications have slowed as mortgage rates increased from the low in June 2003. Refinancing's share of overall applications fell to 46.5 percent from 48.9 percent for the week that ended Jan. 21.
Copyright © 2005, The Baltimore Sun
Originally published January 30, 2005
Mortgage applications have fallen for the fourth time in five weeks, reflecting declines in home purchases and refinancing, a private group's survey found. The Mortgage Bankers Association gauge dropped 3.6 percent to 658.1 in the week that ended Jan. 21 from 682.9. The group's purchase index fell 2 percent to 439 and the refinancing measure decreased 5.7 percent to 1932.8.
Both indexes are below last year's averages and suggest the economy won't get as much of a boost from refinancing and home sales this year as it did in the prior two years.
"The housing market's success in 2004 will partially impinge upon its potential success this year," said Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio. "I see a very gradual reduction in activity."
The mortgage bankers survey covers about 50 percent of all retail residential mortgage originations and has been conducted weekly since 1990. The base period is March 16, 1990, when the value for all indexes was 100.
Thirty-year mortgage rates below 6 percent helped make 2004 a record year for home sales. Economists said that though rates are rising, they will likely remain relatively low.
The Federal Reserve's Open Market Committee is expected to raise the federal funds rate a quarter point to 2.5 percent when it meets this week, based on the median forecast of economists surveyed by Bloomberg News.
"Low inflation and the expectation that the Fed will be able to keep inflation low are two reasons to expect that long-term interest rates will remain low," said Stephen Gallagher, chief economist at French bank Societe Generale in New York.
Gallagher predicted that 30-year fixed mortgage rates will rise to between 6.25 percent and 6.5 percent this year.
"When mortgage rates move above 7 percent, we should start to see zero price appreciation," Gallagher said. "That's when the housing market should really develop some weakness."
Refinancing applications have slowed as mortgage rates increased from the low in June 2003. Refinancing's share of overall applications fell to 46.5 percent from 48.9 percent for the week that ended Jan. 21.
Copyright © 2005, The Baltimore Sun
posted by Kirby P at 10:15 AM
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