WEISS COMMENTS
Outlook For Housing Continues To Deteriorate
-- July 30, 2003
A leading indicator of the future health of the housing sector -- the Mortgage Bankers Association index of mortgage applications -- took yet another beating. Last week, we told you that the plunge in mortgage applications was just beginning. And the latest survey -- for the week ending July 25 -- shows an even bigger slide. Take a look...
As you can see from this graph, mortgage applications are falling fast. In fact, the index is now 47.6% off its May 30th high. While purchases took a modest hit -- tumbling 3.5% -- applications for refinancing fell an astonishing 32.9%.
The reasons? First, there's rising interest rates. The average rate on a 30-year fixed mortgage rose to 5.87% last week. That's way up from its record low of 4.99% in June.
Then, there's the general dismal outlook consumers have on the economy. Yesterday, for example, a report showed that consumer confidence plunged to 76.6 in July, its lowest level since March.
Clearly, rising mortgage rates have put a big wrench in prospective home buyers' plans -- and an even bigger wrench in home owners' plans to refinance their mortgages for cash. This spells big trouble for both the housing market AND the overall economy.
related article:
Refinancing Activity Drops Sharply
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