I hope the mortgage brokers out there have had enough business to feed them for the summer last month. Even with historic low rates, applications have fallen 27.1 percent during the month.
You can thank the expiration of the government tax credit.
The tax credit did boost housing activity. But all it did was pull forward transaction, it did not add much new volume into the system. So we the taxpayers subsidized people buying houses in April to the tune of %8,000 or $6,500. Just to get homebuyers to buy their home a little earlier.
And now the market will muddle for the coming 3 months or so as these transactions wind through the system.
Net results, tax payers money is transferred to home buyers, but no new real activity in the marketplace.
Mortgage purchase applications sank 27.1 percent to the lowest level since May 1997 in the absence of the popular government support, the group said.
U.S. housing groped for footing after more than a year of homebuyer tax credits worth up to $8,000 expired on April 30.
Requests for home purchase loans have fallen almost 20 percent over the past month despite low borrowing costs.
“The data continue to suggest that the tax credit pulled sales into April at the expense of the remainder of the spring buying season,” Michael Fratantoni, the industry group’s vice president of research and economics, said in a statement.
Overall loan requests were down 1.5 percent, on a seasonally adjusted basis, in the week ended May 14, cushioned by a 14.5 percent jump in mortgage refinancing applications as home loan rates neared historic lows. via CNBC.com
(Thanks to Tony Arko for bringing this to my attention)
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