Rising interest rates and slowing home sales caused a big drop in the mortgage loan applications last week as they dropped to a 4 month low. While this is a weekly number and can not be read for a global trend, we are supposed to be at the peak of the buying season and for mortgage applications to be dropping is not a good sign.
The Mortgage Bankers Association’s weekly application index dropped to 618.6 from 643.7 the prior week.
Economists say the rising mortgage rates, falling home prices, and record numbers of houses on the market may be scaring away buyers, in turn worsening the real-estate recession. They expect a recovery in 2008, at the earliest.
The purchase index fell 4.9% to 428.9 from 450.9. The refinancing applications index decreased 2.5% to 1,731.6. Refinances represented 38.7% of all mortgage applications, a slight rise from 38% last week. via Banknet360
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I don't think many builders can hold on until 2008.
The party is over, just like the Dot Com days. It is going to be a rough ride for a while. The weak need to get out, and the overextended better "say their prayers". Hope our banking system can handle it.