April 11, 2006: The continuing fall out for Mortgage Brokers

In what has been a consistent trend, mortgage applications declined for the fourth straight week. The falling demand to refinance home loans has been the main culprit, outweighing a rise in applications to buy houses. This according to an industry group report released Wednesday.Other notes of interest from the report:Borrowing costs increased for all loan types last week, with the average rate on 30-year fixed-rate loans climbing to a six-week peak.Thirty-year fixed home loan rates last week rose 0.03 percentage point to 6.16, excluding fees, matching the rate of the Feb. 23 week, the Mortgage Bankers Association said.The MBA said its seasonally adjusted index of mortgage applications dipped 0.4 to 646.6 last week.The MBA's seasonally adjusted purchase index, an indicator of home sales, rose 2.7 to 413.8 last week.The refinancing applications index dropped for the fourth straight week, declining 4.0 to 2,015.0, its lowest level since late February.Mortgage rates are at a six-week high but well below levels reached a year ago.Though this news of a consistent downward trend is unnerving, especially to those who earn a living directly through the housing market, all is not lost. For those who like to look for a silver lining, one was given, albeit with a cautious opening: unless the job market and the economy slump, relatively low long-term borrowing costs could help spur a housing rebound late in the year, many economists say.Also, Warmer spring weather typically brings buyers back to the market. This year, potential home purchasers will find a huge supply of unsold houses at prices perhaps much lower than the last time they shopped. The hope is that this will be incentive enough to start the market again.Of course, a slow spring sales season could delay a housing recovery already stalled by trouble in the sub prime mortgage sector. Sub prime mortgage lenders have tightened standards, making it more difficult for borrowers with weak credit to get home loans."The spring housing season is key to the broader outlook and early indications appearing weak," according to a Bank of America report this week. Second-half economic growth "depends crucially" on home sales in the second quarter, the firm said.Lighter shopper traffic than expected, downward price momentum and tighter lending standards suggest a soft March to kick off the spring selling season, the report said. The tougher lending standards will slow the housing market's recovery, the National Association of Realtors said Wednesday.The national median existing-home price is expected to slip 0.7 to $220,300 this year, the group said. The median new-home price should increase 0.4 to $246,200 this year after gaining 1.8 in 2006."Higher loan standards will slow the housing recovery," the trade group said.On a four-week moving average, which smoothes out volatility, the MBA said its market and refinancing measures declined and the purchase index was little changed. On that basis, the seasonally adjusted market index was 1.6 lower at 659.8, the purchase index stood at 409.6 compared with 409.7, and the refinancing gauge was down 3.4 at 2,129.9.http://www.bryantsuretybonds.com/

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