Mortgage rates up, mortgage applications down
Many real estate analysts have noted that one of the keys to the nation's housing boom has been historically low interest rates.
But what happens if rates go up?
When rates went up last Spring, mortgage application activity slowed. Now again, rates are showing steady growth upwards, and every time the Fed raises rates, the inevitability of higher rates seems more obvious. Thus, the fact that, according to the Mortgage Bankers Association, mortgage applications have dropped for the third straight week is a bit alarming.
Even more disconcerting; however, is the fact that ARM loans are heating up as fixed-rate loans are cooling? Why? It seems that the high price of homes have limited the financing options of many homebuyers. Additionally, flippers love to use ARMs.
If mortgage rates continue to rise, by the time these ARMs convert to variable rate notes, the additional costs could be staggering for many new homeowners. Yet, if mortgage applications continue to decline, the cost of homes will have to go down, leaving many home owners 'upside down' and possibly in financial trouble.
All the data seems to indicate a couple of things. Homeowners should be on fixed rates and the price of homes for sale should stabilize and probably trend lower.
But what happens if rates go up?
When rates went up last Spring, mortgage application activity slowed. Now again, rates are showing steady growth upwards, and every time the Fed raises rates, the inevitability of higher rates seems more obvious. Thus, the fact that, according to the Mortgage Bankers Association, mortgage applications have dropped for the third straight week is a bit alarming.
Even more disconcerting; however, is the fact that ARM loans are heating up as fixed-rate loans are cooling? Why? It seems that the high price of homes have limited the financing options of many homebuyers. Additionally, flippers love to use ARMs.
If mortgage rates continue to rise, by the time these ARMs convert to variable rate notes, the additional costs could be staggering for many new homeowners. Yet, if mortgage applications continue to decline, the cost of homes will have to go down, leaving many home owners 'upside down' and possibly in financial trouble.
All the data seems to indicate a couple of things. Homeowners should be on fixed rates and the price of homes for sale should stabilize and probably trend lower.
1 Comments:
Hot News From The Automotive Lending Industry!!
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All statements made are our express opinion only and should be treated as such. We may own,
take position and sell any securities mentioned at any time. Any statements that express or
involve discussions with respect to predictions, goals, expectations, beliefs, plans,
projections, objectives, assumptions or future events or performance are not statements of
historical fact and may be "forward looking statements." Forward looking statements are based
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number of risks and uncertainties which could cause actual results or events to differ materially
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(IR Marketing). Forward looking statements in this action may be identified through the use of
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the holding of IF LH shares prior to the publication of this report. Be aware of an inherent
conflict of interest resulting from such holdings due to our intent to profit from the liquidation
of these shares. Shares may be sold at any time, even after positive statements have been made
regarding the above company. Since we own shares, there is an inherent conflict of interest in
our statements and opinions. Readers of this publication are cautioned not to place undue reliance
on forward-looking statements, which are based on certain assumptions and expectations involving
various risks and uncertainties that could cause results to differ materially from those set forth
in the forward- looking statements. This is not solicitation to buy or sell stocks, this text is
for informational purpose only and you should seek professional advice from registered financial
advisor before you do anything related with buying or selling stocks, penny stocks are very high
risk and you can lose your entire investment.
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