Mortgage Applications Plummet To 18-Year Lows As Rates Hit 2010 Highs

With purchase applications tumbling alongside the collapse in refinancings, the headline mortgage application data slumped to its lowest level since September 2000 last week.

This should not be a total surprise as Wells Fargo's latest results shows the pipeline is collapsing - a forward-looking indicator on the state of the broader housing market and how it is impacted by rising rates, that was even more dire, slumping from $67BN in Q2 to $57BN in Q3, down 22% Y/Y and the lowest since the financial crisis.

(Click on image to enlarge)

But in the month since those results, mortgage rates have gone higher still... (this is now the biggest 2Y rise in mortgage rates since 2000)...

(Click on image to enlarge)

Sparking further weakness in the housing market...

(Click on image to enlarge)

And absent Xmas weeks in 2000 and 2014, this is the weakest level of mortgage applications since September 2000...

(Click on image to enlarge)

What these numbers reveal, is that the average US consumer can barely afford to take out a new mortgage at a time when rates continued to rise - if not that much higher from recent all-time lows. It also means that if the Fed is truly intent in engineering a parallel shift in the curve of 2-3%, the US can kiss its domestic housing market goodbye. 

And, as famed housing-watcher Robert Shiller recently notedthe weakening housing market is similar to the last market high, just before the subprime housing bubble burst a decade ago.

The economist, who predicted the 2007-2008 crisis, told Yahoo Finance that current data shows “a sign of weakness.”

“This is a sign of weakness that we’re starting to see. And it reminds me of 2006 … Or 2005 maybe,”

Housing pivots take more time than those in the stock market, Shiller said, adding that:

“the housing market does have a momentum component and we’re seeing a clipping of momentum at this time.”

1 2
View single page >> |

Disclosure: Copyright ©2009-2018 ZeroHedge.com/ABC Media, LTD; All Rights Reserved. Zero Hedge is intended for Mature Audiences. Familiarize yourself with our legal and use policies every ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.