Mortgage Applications Rise As Refinancing Jumps

NEW YORK (Reuters) - Mortgage applications jumped in the first full week of 2009 as record low interest rates spurred the greatest demand for home refinancing loans in over 5-1/2 years, data from an industry group showed on Wednesday.

Low mortgage rates, however, have yet to fuel demand for loans to purchase homes.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended January 9 increased 15.8 percent to 1,324.8, the highest reading since the week ended July 11, 2003, when it reached 1,358.2.

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Comments

[Peter007]

This is good news. The housing market takes along time to move. Its not like the stock market. Housing decisions make take a year or longer.
The lower rates will put more money into more households than the stimulus package in congress. Some of that money will find its way into the economy in the retail sector. Some of the savings will be used to keep people in their homes facing foreclosure. That means less empty houses on the market. Less houses on the market means housing prices may stop their decline. New households are being formed and there is very little new construction. Demand is building and once housing prices stabilize, many new buyers will enter the market to take advantage of the low prices. When housing stabilizes, the bank balance sheets will improve and there will not be a need for more bailout money, The downward cycle will be broken. By July, the economic situation will be completely different.

[Novista]

It appears that over 100,000 readjusted mortgages in 2008 went again into default within six months.

And another thing: who in their right mind would refi to a 40-year mortgage on a McMansion? Have you seen the (lack of) construction quality?

[Peter007]

Location, location, location. Its all that matters..

[WonderingNThinking]

Don't refi if you think there's a good possibility you won't be able to pay your mortgage sometime in the future. A refinanced loan becomes a recourse loan (meaning the bank can sue you for the loss) whereas, in many states, the original "purchase" loan is a non-recourse loan, meaning they can only foreclose.

[Peter007]

Good point. I'm in the mortgage business and didn't know that.

[PhilipTaylor]

THE MORTGAGE BANKERS ASSOCIATION IS THE ONE WHO HAS BLOCKED THE WRITE-DOWNS OF PRINCIPALS AND HAS FOUGHT REFORM AND REGULATIONS!

Moprgage Banks are at the HEART of this Crisis so we need ways to BYPASS these corrupt middle-men!

The traditional part of mortgage banking is to get their funds from government at low rates and then price gouge their customers to make massive FEES.

TAXPAYER money has been used to MERGE Banks into MEGA BANKS failing like they have on so many other FRONTS! Reducing competition was goal, BUT:

With Technology Government can fight reduction in competition by offering the following:

Internet Central Bank, ICB
------------------------------------
1. Include Fannie/Freddie in the ICB
2. Include the FED in the ICB
3. Use Internet, Databases, and automation software to provide direct Banking Services
4. AVOID USURY - the interest above the lawful rate or unreasonably high rates Banks now charge.
5. ICB competes with Banks removing corrupt Middle-Man Layer who charges High RATES and FEES!

Provide Internet Automated Fixed Rate Loans at FED Rate +2.5% or 2.5%, to all Homeowners with Low FEES. 98% of loan processing done with automation and 2% for final Manual Verifications.

Offer ATMs, Credit Cards, and Auto Loans all without "TRICKS" or TRAPS" and low rates.

This stimulates the Economy more than other options!

[mrcontinental]

People who got screwed trying to get unscrewed.

[Hope-Now]

What they don't say it's that the people that "really need" to refinance or modify their mortgages ; those that are facing foreclosure or are already there don't get too much help.

The bank want to work just with people with lots of equity, perfect credit and lots of income. They went from lending money to everyone to just lending money to those that don't need it....
The government launch on Dec 15 a program called "Streamline Modification Program" (http://www.hopenowmortgages.com/?streamline_modification_program) that gives FHA Loans to people in problems. It is very good because the banks can give the lowest interest rate, extend the term to 40 years, forgive the penalty fees, etc so the mortgage payment is affordable. The problem? well banks don't make much money ( low interest, no penalty fees, etc) so they are no interested in give this loans...
They rather use the money for regular refinances!

[uncleentropy]

I remember Bush I trying to dress up his and Reagan's recession in the early 90s with rhetoric about loan applications increasing.

I am so tired of addressing the real estate bubble as the fault of the democrats. It wasn't. Lax oversight, predatory lending, lousy underwriting, GLB, and subprimes can be laid clearly at the feet of Bush and the Republican Congress....Don't think for a minute that their hearings in 2005 had anything to do with reigning in FMs. They wanted to keep the money flowing to backstop all the lousy contracts out there....their oversight efforts were non-existent.

[CaptainHowdy]

Errr... isn't this a big part of how we got in trouble in the first place?

[brooklyncitizen]

applications for refi's have jumped but it doesn't mean they are being granted...no one is lending money....I'm in the middle of refinancing and it has been really uphill and I'm a "good risk".

[ThePeacemakers]

It's uphill because they really don't want to have to give out to much at the lower interest rates.

[Hope-Now]

Nope. They are no using the Streamline Modification Program that is a program that give loans to people facing foreclosure and it's backed by the government ( HopeNowMortgages.com ). They are giving loans to people with lots of equity in their house, high income and no need for money...

[SailFree]

What is fascinating is that, with the help of a media which studiously avoids telling the truth about the mortgage crisis, those who helped cause it, almost totally DEMOCRATS, are rewarded for the disaster they have created by being put in charge of the solution!

[ThatOne4Me]

huh? i thought bush was the president for the past 8 years when for the most part he had majority of gop support in congress and the media.

where have u been? please go back and hibernate.

[CaptainHowdy]

Excerpt from: http://www.nytimes.com/2008/12/21/business/21admin.html?

White House Philosophy Stoked Mortgage Bonfire

From his earliest days in office, Mr. Bush paired his belief that Americans do best when they own their own home with his conviction that markets do best when let alone.

He pushed hard to expand homeownership, especially among minorities, an initiative that dovetailed with his ambition to expand the Republican tent " and with the business interests of some of his biggest donors. But his housing policies and hands-off approach to regulation encouraged lax lending standards.

[sonoffestus]

SailFree, you are in need of a keel hauling.

[SailFree]

http://www.gmu.edu/departments/economics/wew/articles/09/CongressFinancialMess.htm

As usual, Professor Williams has hit the proverbial metallic fastening implement on hits cephalic end.

[SailFree]

Pardon typo.

[mortrefuge]

Umm... Maybe he's just hitting himself in the head...

http://www.thislife.org/extras/radio/355_transcript.pdf

http://www.thislife.org/Radio_Episode.aspx?episode=355

[Nova16]

Yes the federal government did increase under Bush by 42% but that did not increase effectiveness or efficiency. The Gramm, Leach, Blilley Act of 1999 know as the Commodity Futures Modernization Act and the repeal of the Glass Steagle Act ultimately removed all regulation and oversight which was the goal of the republicans in the financial markets which led to the downfall of Enron. Since then we have all been "enroned". Your professor Willliams can "spin" his politics anyway he wants, but his economic analysis has spun out of control.

[Novista]

It's always spin when the other side does it, right?

And "progressive exceptionalism" means never having to say you're sorry, or accept any culpability for the housing mess.

[fact finder]

Just more proof that the economy sucks. More debt that can not be repaid, just tieing string on to the end of the rope in hope that you will not fall.

[MetalCanuck]

PEople are idiots.

[WIpatriot]

Did you know that half the population's IQ is 100 or less??

[mrcontinental]

Stop talking about me behind my back man.