-- August 20, 2003
The two biggest drivers of housing activity are on the slide. Mortgage applications -- for both purchases and refinances -- buckled last week, according to the Mortgage Banker's Association. Overall, the mortgage applications index fell 10.7% to 736.7 -- the fourth drop in five weeks ...
Clearly, spiking mortgage rates -- Freddie Mac reports that the average rate on a 30-year fixed mortgage is up to 6.24% from 5.21% in June -- are cutting the housing boom off at its knees. Mortgage rates did ease slightly last week, but the overall trend is up. And that means the trend for mortgage activity should be down for the long term.
That's not great news for the economy and the markets. Housing has been one bright spot amidst a cloud of gloom during this economic slump. As the housing boom fizzles, the economy may sink even further. And without the market's optimism of a recovering economy, the markets should tumble as well.
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