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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ThunderingTurd's picture

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

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.


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.

El Oregonian's picture

It only gets BITTER from here...

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! 

Stoploss's picture

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

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

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.

duo's picture

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

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.

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...

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...

Flagit's picture

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

where, where, WHERE?>

i need phone numbers and emails.

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

Temporalist's picture

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

NotApplicable's picture

Don't worry, QE diarrhea will be back.

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.

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%.

SheepDog-One's picture

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

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.

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.

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.

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!

bnbdnb's picture

And just like that...BUY

Bunga Bunga's picture

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

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''s a celebration for Murka bitchez!

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.

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.

EhKnowKneeMass's picture

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

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.

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. 

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.  

EhKnowKneeMass's picture

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

Wait... what?

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?!

ebworthen's picture

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

It worked out so well the last time...

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


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!

jtmo3's picture

Green shoots!

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 

ebworthen's picture

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


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%.



Catch-22's picture



… although the refies are cratering, applications for purchases are 15.9 % higher YOY…  and last year was a good one…

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

dirtbagger's picture

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

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…