It's safe to say, heading into the weekend, that the housing and mortgage markets are still in disarray. As reported by Reuters, mortgage apps are up. Good news, right? Not so fast...the news comes with this caveat: "borrowers are having a tougher time getting mortgages and lenders have tightened up underwriting criteria, particularly on credit scores and downpayments" (from Bob Moulton, president of Americana Mortgage Group in Manhasset, New York). Bummer.
Moulton goes on to say that "this small upward blip in mortgage applications quite honestly is nothing to get excited about. The whole overall trend is down. The number of sales is going to be down this year, the median home price is going to be down this year."
On the bright side, RBC Capital Markets' T.J. Marta says "the hemorrhaging is not under control." Of course, we heard something similar a few months ago when experts were saying the subprime mess was "contained" and would not "spill over" into other areas of the economy. That theory didn't hold much water.
Here's the smartest thing I read from this article: "One possibility, we think, is that marginal homebuyers, that is, people who think they may not get a mortgage at all or at least a mortgage on acceptable terms, are making multiple applications in order to boost their chances." That's from Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York. Seems like a common sense theory, and I'll be in a month or two we'll see he's right.
Article: http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2007-05-23T154043Z_01_N23167587_RTRIDST_0_USA-ECONOMY-MORTGAGES-UPDATE-2.XML&pageNumber=0&imageid=&cap=&sz=13&WTModLoc=InvArt-C1-ArticlePage2
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