Mortgage applications, down 44% since this week last year, have hit their lowest level since December of 2000, according to the Mortgage Bankers Association.
On face, the survey tells us about the state mortgage lending, but if we dig just a little deeper, there are insights for the housing market as well.
Applications for purchase money mortgages are a leading indicator of sorts. Because most people apply for financing weeks or months before making an offer, today’s applicants are tomorrow’s buyers.
So how do the purchase numbers look? Via Bloomberg:
The mortgage bankers’ purchase index fell [11%] to 279.3, the lowest level since October 2001.
Better, but still not great. And this, in the face of falling home prices and mortgage rates at or below 6%, does not suggest a housing market recovery is just around the corner.
It also suggests there’s a lot of fear in the housing market, which can be taken as a good or bad sign, at least according to Buffet:
"A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful."