Mortgage activity falls for third straight week
-- February 11, 2004

Stocks closed higher today as Fed Chairman Alan Greenspan piped up that economic growth is strong ... with little sign of inflation. But the fact is all is not well with the U.S. economy. Here's just one example ...

Interest rates for home purchases and refinancings remain at low levels, but that's not helping boost recent mortgage activity: A gauge of mortgage applications by the Mortgage Bankers Association tumbled 6.8% last week. Take a look ...

As this graphic shows, activity in mortgage activity is slowing. In fact, last week's decline comes on top a 1.5% drop for the week ending January 30 and a fall of 5.2% for the week ending January 23.

But that's not all. On top of the composite index taking its third hit in a row, two index components -- the purchase index and the refinancing index -- also took it on the chin. The purchase index alone tumbled 9.4% last week alone!

Keep an eye on this indicator of future mortgage activity. That's because mortgage activity -- from both purchases and refinances -- can provide a big boost to consumer spending. If it keeps declining, future growth could be in trouble.

related article:
Home Loan Applications Dip, Still Lively