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Mortgage Apps Plunge At Fastest Rate In Over 3 Years

Tyler Durden's picture




 

We were promised by the cognoscenti of PhD economists that higher mortgage rates would not affect the so-called housing recovery. They devoutly prayed to the god of momentum that "rates were still low historically" and "housing is on a self-sustaining path" and numerous other truisms that always fail at the turning points. Well, it appears from mortgage application data that things are not looking so hot.

Whocouldanode that smashing interest rates higher at the margin (remember its the marginal impact - not absolute since the majority who can have refi'd or purchased down to new low rates with their fixed cash flow and this bid up house prices via their new found affordability) would crush the dreams of an organic (not 'hedgie-driven flip-dat-house REO-to-Rent'-based) recovery. And don't forget the drag from these higher rates to come, and what happened the last two times mortgage rates spiked at this pace.

This collapse year-over-year in mortgage apps is as bad as that in 2006 when the last bubble burst...

 

It's not like we haven't seen this effect before - how quickly we forget...

 

Charts: Bloomberg

 

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Wed, 07/03/2013 - 11:22 | 3717991 ThunderingTurd
ThunderingTurd's picture

TPTB are losing control.  This is good for at least 25 SPX points!

Wed, 07/03/2013 - 11:25 | 3718004 nope-1004
nope-1004's picture

Mortgage apps plunged this month at the fastest pace in 3 years, but yields rose at the fastest pace in 30+ years.  Give this a few months, it will show mortgage apps plunging at the fastest pace in history.

 

Wed, 07/03/2013 - 11:26 | 3718011 NotApplicable
NotApplicable's picture

TPTB have never had control. What they have is massive influence, which, they've still got.

Now what they need is massively massive influence in order to retain the quo.

As always, this should end well.

Wed, 07/03/2013 - 12:19 | 3718314 El Oregonian
El Oregonian's picture

It only gets BITTER from here...

Thu, 07/04/2013 - 06:07 | 3720751 Muppet of the U...
Muppet of the Universe's picture

Remember kids!  Make sure you ONLY read zerohedge!  NEVER EVER learn anything other than what ZH says, b/c god knows everyon else are lying jew bastards!  Also!  Never EVER think creatively, or learn about trading, investment, or wave theory.  & FFS, any time the market moves down,  Always assume that it is b/c control has been lost.  Those CBs are definitely not smart enough to time things to make it look like they are in control of everything!  & make sure to panic whenever possible! 

Wed, 07/03/2013 - 11:35 | 3718065 Stoploss
Stoploss's picture

Shit is running down the legs of the ARM holders as well.

Wed, 07/03/2013 - 11:41 | 3718104 derek_vineyard
derek_vineyard's picture

some housing construction just resumed in last two years in my area based on low interest rates providing purchasing power. looks like those 2 subdivisions will be the last started (in 2005 we had 100 sub divisions going) and those few construction workers laid off again

what a recovery

Wed, 07/03/2013 - 12:02 | 3718193 Winston Smith 2009
Winston Smith 2009's picture

I live in the upscale part of town and don't see any new home construction, but all kinds of commercial construction including a high end open-air shopping center (not a mall) that has been delayed since 2008.  Bad timing, IMO.

Wed, 07/03/2013 - 11:41 | 3718108 duo
duo's picture

But if everyone is paying over the listing price using cash, who cares about mortgage rates?

Wed, 07/03/2013 - 12:01 | 3718210 Winston Smith 2009
Winston Smith 2009's picture

The divergence of home sales from mortgage applications may be an indication of homes being bought with cash as investments by pension funds and others in a search for yield.  If so, this won't end any better than it did in 2007/8.

Wed, 07/03/2013 - 13:47 | 3718794 Groundhog Day
Groundhog Day's picture

Housing bubble part deux?

Wed, 07/03/2013 - 12:53 | 3718501 Dingleberry
Dingleberry's picture

Sigh......almost all businesses operate at the margins. Peopled are stretched so thin that a financial speedbump will wipe them out. Prices rose double digits this year due to 3% rates. Now we have higher prices AND higher rates.

What will give first, prices or demand?

I have a guess. Stay tuned...

Wed, 07/03/2013 - 13:01 | 3718547 CheapBastard
CheapBastard's picture

Zero down houses are easy to buy once again in my area (esp from new builders) and advertised almost non -stop on the weekend radio (only to be interrupted by the car dealership and pick up ads) ... and the job checks are minimal....not a good sign...back to their old tricks...

Wed, 07/03/2013 - 21:12 | 3720237 Flagit
Flagit's picture

Zero down houses are easy to buy once again in my area

where, where, WHERE?>

i need phone numbers and emails.

Wed, 07/03/2013 - 11:24 | 3718000 killallthefiat
killallthefiat's picture

I have been reporting this news to my friend who is in the market to buy a house.  Whenever I send him ZH articles, he gets mad at me lamenting the fact that he and his family did not purchase a couple of weeks sooner.  WTF

Wed, 07/03/2013 - 11:25 | 3718006 Temporalist
Temporalist's picture

Some people can't wait for the shackles of debt slavery.  There's never been a better time to owe!

Wed, 07/03/2013 - 11:28 | 3718019 NotApplicable
NotApplicable's picture

Don't worry, QE diarrhea will be back.

Wed, 07/03/2013 - 12:28 | 3718370 Toolshed
Toolshed's picture

QE will increase as the Fed overreacts. This time it won't be free obamaphones, it will be free obamahomes!!! I think I will quit my job and stop paying my mortgage so I can qualify.

Wed, 07/03/2013 - 12:58 | 3718533 Voicefather
Voicefather's picture

^ This.

Look at how many people sat in homes not paying mortgages in the little recession of 08, 09. When the real SHTF in the looming crisis you will have pretty much everyone that doesn't outright own their home missing payments. Lenders that aren't instantly destroyed by that can't spend the time and money to foreclose on people to only drive the price of the houses down in the process of flooding the market with foreclosed homes. They will renegotiate with homeowners and let them stay in return for "pay us what you can when you can" deals.

 

If the looming crisis isn't as bad as some suggest we are in rising rate situation where even if the value of your home is falling, you have locked in a low rate. A 150k home at 4% has payments similar to 90k home at 10%.

Wed, 07/03/2013 - 11:32 | 3718050 SheepDog-One
SheepDog-One's picture

Missed the 'perfect time to buy a 30 yr mortgage' by just a few hours! FUCK! 

Wed, 07/03/2013 - 11:44 | 3718123 CheapBastard
CheapBastard's picture

Why are they sad they did not buy? House prices will drop much lower as rates inch up....when the price re-adjusts to the higher mortgage rates  your friend will be able to grab a house for 30% less.

Wed, 07/03/2013 - 12:08 | 3718249 MachoMan
MachoMan's picture

Kind of myopic in that it doesn't account for the rest of the effects of inflation...  In other words, 30% less relative to what?  Nominal analysis is...  irrelevant.

Wed, 07/03/2013 - 14:10 | 3718912 KCMLO
KCMLO's picture

Your comment is 100% correct if home values aren't still overinflated relative to other consumer items.  Not that it makes much of a difference in the long run... it's a scam either way.

Wed, 07/03/2013 - 21:41 | 3720290 Flagit
Flagit's picture

i gave you a green. any chance you will walk through that, "Dummy" style?

im renting. costing a fortune. im like " - " this close to squatting a forclosure. i dont have one picked out yet, but from some of what i have read, it has the potential to work out in your favor.

now, i dont have to stoop to their level and steal it, although i should. i could easiy make a payment that is guranteed to be lower than what i pay now.

the paper trail is bad. it does not reflect the true status of cash flow : )

good for me, bad for my ability to get a home loan. what i need is some of the old lax-in-lending procedures to fall my way. alright coach, lets get a playbook together!

Wed, 07/03/2013 - 11:25 | 3718007 bnbdnb
bnbdnb's picture

And just like that...BUY

Wed, 07/03/2013 - 11:26 | 3718010 Bunga Bunga
Bunga Bunga's picture

Stocks are up, wealth effect, no mortgage needed, all buying cash.

Wed, 07/03/2013 - 11:33 | 3718013 SheepDog-One
SheepDog-One's picture

YES! Yet moar good news? Is it Christmas for Wall St already or what? And here I thought it was only fakeass nothing-could-top-this-irony 'Independence Day' time.....it's a celebration for Murka bitchez!

Wed, 07/03/2013 - 11:28 | 3718017 Dr. Engali
Dr. Engali's picture

This is clearly bullish news since people will be living together in shanties they will have moar disposable income to drive stocks higher. Just BTFD.

Wed, 07/03/2013 - 11:29 | 3718024 Schmuck Raker
Schmuck Raker's picture

Egypt TV reports Mursi under house arrest

-ZH tweet

 

http://www.zerohedge.com/news/2013-07-03/game-over-morsi-under-house-arr...

Wed, 07/03/2013 - 11:34 | 3718039 SheepDog-One
SheepDog-One's picture

It would be great to see ObaMao's dictator stooge swinging from a rope before close today! Probly he'll just get a plane full of gold and off to England though.

Wed, 07/03/2013 - 11:31 | 3718041 EhKnowKneeMass
EhKnowKneeMass's picture

The correct spelling is Moarsi. They must have arrested the wrong Moarsi, then.

Wed, 07/03/2013 - 11:42 | 3718112 Osmium
Wed, 07/03/2013 - 11:44 | 3718121 IdeasRbulletproof
IdeasRbulletproof's picture

Moarsi, Morsi. Opama, Obama. Same difference...

Wed, 07/03/2013 - 11:47 | 3718136 Schmuck Raker
Schmuck Raker's picture

I think the correct spelling for Obama,  in Egypt anyway, is DICK.

Wed, 07/03/2013 - 12:04 | 3718225 IdeasRbulletproof
IdeasRbulletproof's picture

Or Pitch...

Wed, 07/03/2013 - 12:10 | 3718265 ebworthen
ebworthen's picture

Meresy?

Wed, 07/03/2013 - 11:31 | 3718042 McMolotov
McMolotov's picture

A rental company where I live has been buying up houses left and right. That's the "recovery." People are delusional if they believe the housing market is "recovering" because lots of young, unmarried, unemployed people are getting 30-year mortgages to purchase their first home.

Wed, 07/03/2013 - 11:46 | 3718132 IPA
IPA's picture

In my neck of the woods, North of Seattle, WA,  there is very minimal housing construction. However, they are putting up large apartment complexes anywhere and everywhere.  1000sf apartment in my area is about  $1500, but people pay. 

Wed, 07/03/2013 - 12:33 | 3718397 Meat Hammer
Meat Hammer's picture

I live in the dictionary definition of suburbia.  I'm seeing for-sale signs (including mine) popping up all over as people unload while they can.  My neighbors aren't as dumb as I had thought.  One guy I talked to as he was loading the moving van said they're taking their ridiculous profits and buying land in Oregon with cash.  He had that "I'm no longer a debt-slave!" twinkle in his eye.  

Wed, 07/03/2013 - 11:34 | 3718058 EhKnowKneeMass
EhKnowKneeMass's picture

Why buy a house, when you can get an Obama (red/blue) phone for free?

Wait... what?

Wed, 07/03/2013 - 11:37 | 3718078 Handful of Dust
Handful of Dust's picture

The "affordability" of those boxes just became alot less. Just think what the painful cost is of these soaring rates over 30 years?!

Wed, 07/03/2013 - 12:08 | 3718252 ebworthen
ebworthen's picture

Real estate pumpers on CNBC suggesting Adjustable Rate Mortgages (ARM's).

It worked out so well the last time...

Wed, 07/03/2013 - 11:40 | 3718097 Temporalist
Temporalist's picture

OT but related in to the general malaise is that 4 "blockbuster" movies have been total disappointments.

Afta Earf, Loan Stranger, White Houz Party Downz, Whirl War Z ... maybe the US consumer is tapped out.  Nah can't be

 

Wed, 07/03/2013 - 11:44 | 3718124 insanelysane
insanelysane's picture

The sheeple had bought in to the hype in my area at least the sellers.  A ton of For Sale signs have popped up in the last few weeks.  Bullish!

Wed, 07/03/2013 - 11:53 | 3718175 jtmo3
jtmo3's picture

Green shoots!

Wed, 07/03/2013 - 11:59 | 3718197 Kasperfx
Kasperfx's picture

south fl rentelas has exploded, theirs got to be 100x more homes for rent then last year, I went to look at a couple 5k+ listed and the realtors all told me thay have 100s more not being advertised so just let them know what we are looking for and the budget and thay will work with us. it sounded as all the realtors were geting the same info/script  explaing the deals the exat same way 

Wed, 07/03/2013 - 12:05 | 3718230 ebworthen
ebworthen's picture

Have wages and labor participation rate gone up to the point that a 1% rise in mortgage rates is "o.k."?

NO.

I cannot believe the dolts on the tele saying that "historically" a 4.5% rate is low and they bought their house in 1987 at 10%.

SO FUCKING WHAT!

Dumbshits.

Wed, 07/03/2013 - 12:11 | 3718274 Catch-22
Catch-22's picture

 

 

… although the refies are cratering, applications for purchases are 15.9 % higher YOY…  and last year was a good one…   http://www.mortgagenewsdaily.com/data/mortgageapplications.aspx

… now how is that going to screw up the housing market ?

Wed, 07/03/2013 - 12:32 | 3718386 dirtbagger
dirtbagger's picture

Right on Catch 22.  Another misleading ZH post.   Refi's don't tell squat about the housing market. 

Wed, 07/03/2013 - 13:17 | 3718626 Catch-22
Catch-22's picture

… you know they know better…  why are they doing this ?

 

… I don’t drink the koolaid but I’m no doomer either…

… I’m just looking for accurate current analysis because I have a lot riding on this…

 

 

Wed, 07/03/2013 - 12:55 | 3718515 Thin_Ice
Thin_Ice's picture

The thing is...mortgage apps and mortgage approvals are two different things. Anybody can apply for a mortgage, but not everybody is approved for a mortgage.

Wed, 07/03/2013 - 13:25 | 3718669 Catch-22
Catch-22's picture

… I meant applications for refies … sorry. I am comparing apples to apples…

Wed, 07/03/2013 - 15:17 | 3719225 Thin_Ice
Thin_Ice's picture

What are you doing comparing apples to apples? That makes sense, which, in the new normal, makes no sense at all.

Wed, 07/03/2013 - 12:15 | 3718295 PaperBear
PaperBear's picture

Again, all this time with a low interest rate and followed with all that QE and things are back to 3 years ago.

Wed, 07/03/2013 - 12:19 | 3718315 Dr. Kenneth Noi...
Dr. Kenneth Noisewater's picture

Hmm, seems like I timed pretty close to the bottom for 3.375% 30y fixed with 5% down..  And 1.55% for 5y with 0 down for the car..  Might be time for a bit of junk silver and some compound improvements (solar, water storage to supplement the well, gun vault)..

Wed, 07/03/2013 - 12:21 | 3718328 Ace Ventura
Ace Ventura's picture

Here in central VA, there are at least two brand new suburban neighborhoods who barely got past clearing the land and putting in the gravel-roads/cul de sacs. That was 2 years ago. Despite some aggressive marketing, the development nearest me has NOT SOLD ONE SINGLE PLOT. In that case, they haven't even built a model home yet, and apparently are not ever going to do so. The other development I have not explored in detail yet, but if the main entrance is any indication, it isn't doing so well either (not a speck of pavement, all gravel going back into the woods, no construction activity visible from the main road).

This is Virginia, where we supposedly 'weathered' the housing debacle. LOL. BTW, I too can echo the intel from whoever said the strip-malls are still being thrown up with wild abandon. These ain't your strip-malls from decades past, with a Wally-Laundromat and an Anna's Pizza joint.....these are the modern suburban mega-strip-malls, complete with Targets, 20 screen theater-plex, 10 different kinds of franchise mid-to-high-end sit-down restaurants, styling salons, wine supermarkets, etc.

Granted.....the newest of these mega-strips is half empty (un-leased)....almost two years after construction on the buildings was finished.

As for the subject of this story.......is there hope that rates will be forced back down again in order to keep frantically trying to refloat the housing bubble? I finally decided it was time to refi, just in time to get shaboinked by Bernankes infernal 'tapering' speech.

P.S. Fuck you, Benny B.

 

Wed, 07/03/2013 - 12:28 | 3718373 Meat Hammer
Wed, 07/03/2013 - 12:42 | 3718447 sbenard
sbenard's picture

Isn't it nice to know that we no longer need homes or shelter? After all, we have PRINTED prosperity now!

Sing with me now: "Kumbayah, my lord..."

Wed, 07/03/2013 - 12:51 | 3718493 bonzo112358
bonzo112358's picture

That doesn't make any sense.  How can anyone pass up great offers like these on the market?  The "huge backyard" makes this one worth the price.

http://www.southlandproperties.net/idx/mls-iv13125760-1861_walnut_street_la_verne_ca_91750

Wed, 07/03/2013 - 12:58 | 3718537 Thin_Ice
Thin_Ice's picture

lol, wow! And located a stone's throw from the highway to boot!

Wed, 07/03/2013 - 13:08 | 3718582 NEOSERF
NEOSERF's picture

I love the smell of printing presses in the morning...BTFD, there ain't going to be no tapering.

Wed, 07/03/2013 - 14:18 | 3718949 KCMLO
KCMLO's picture

Yeah, and I just lost my most recent job due to this decrease... well sort of.  Actually I lost my job on Monday because the company I worked for lacks any attempt at foresight.  I warned them 3 months ago that even if rates stay flat we were starting to seriously crimp off the supply of likely rate/term refis in Missouri.  I also presented them with a couple suggestions to stand up a Secondary Marketing Department that would generate an additional $2.5 million in revenue.  That was a formalized proposal I couldn't even get in front of senior leadership (it's only a ~150 person company) as they said quite literally "No thanks, we know what we're doing.  Leave us alone."  So what do I get for trying to save the company and by extension my job?  The pink slip.  So now I begin my search for a new job, something outside of the mortgage industry (again) only to find that the only field I seemed to get hired for is the mortgage industry (again) where I MIGHT be able to squeeze out another couple months of employment before I get laid off... again.  I can see why no other industry thinks I have transferable skills... what kind of moron keeps coming back for this much punishment?

Wed, 07/03/2013 - 16:02 | 3719368 starman
starman's picture

my favorite was bob fucking lutcz on Kudlow claiming a 13% gain in sales the best since 08!? 

he must of forgot he lost 15% of hes dealerships and GMis subrime lending !!! 

Wed, 07/03/2013 - 19:14 | 3719888 kareninca
kareninca's picture

In the eastern CT town where I dream of living but never will, a modest 1964 three bedroom one and a half bathroom house has a Zillow (too high, but some info) value of 225k.

Property taxes on this place in 2010: $5447

Propety taxes in 2011: $7733

Oddly enough, although most houses in town are valued in the 200-300k range, the ones on the market are costlier  -  around 650k (with a property tax of 22k).  It is almost as if people were hoping to unload a liability that just keeps growing . . .

Who cares about mortgage rates; property taxes are what is going to take this baby down.  At a certain point people just CAN"T PAY MORE.  What happens then, in "good" but not rich areas?  I guess we'll see.

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