Martin Weiss' Safe Money Report Home Store About Us FAQ Martin Weiss' Safe Money Report Make A Wish Martin Weiss' Safe Money Report Martin Weiss' Safe Money Report
Martin Weiss' Safe Money Report Current Issue and ArchivesRatingsInvesting BasicsSample Issue Martin Weiss' Safe Money Report
Daily News & Commentary    Login  help  contact us   New User Registration

> Welcome
> Daily News
> E-Services
> Subscribe

Growing Cracks In The Housing Market
-- July 23, 2003

Right now, it is undeniable that the most critical sector determining the fate of the economy is housing. Throughout the last three years, while techs wrecked and manufacturing tumbled, housing has been the last bastion of support for consumer spending, retail sales, and the ENTIRE economy.

Problem: The housing bubble was driven by the mortgage refinancing boom -- and the refi boom, in turn, was driven by ridiculously low Treasury bond rates.

Now, take away the low mortgage rates and what do you get? You get a chain reaction of events that could lead to the greatest housing bust in decades: A sharp slowdown in refinancing, a sudden disappearance of cash in the market, falling prices and fire sales -- a bursting bubble that could make the tech wreck seem small by comparison.

Is it already happening? It's too soon to say with certainty. But look at the chart below. It's the MBA index of mortgage applications -- both for new purchases and for refinancing. Right now, activity stands at 1,284, some 30% below its level of just seven weeks ago.

Mortgage applications are plunging!

If this decline continues -- and we suspect it will as mortgage rates rise -- serious declines in housing and construction are inevitable.

With housing one of the few remaining economic bright spots, the slowdown in mortgage activity is grim indeed. So watch out as these numbers come home to roost!

related article: Mortgage Applications Fall in 7/18 Week

printer-friendly format  printer-friendly format

Archive of Daily Commentary: select a past article from the box below.

Return to Today's Commentary

Copyright © 2002 All Rights Reserved
privacy policy & cookies :: terms of use