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June 17, 2010

Mortgage applications tick up

Interest in mortgages to purchase a home, which plummeted after the April 30 deadline for the home buyer tax credit, is on the rise again -- at least a bit.

The Mortgage Bankers Association's newest survey shows mortgage applications for home purchases increasing 7.3 percent last week, compared with the week before. That's the first upward movement in six weeks.

But the level is still more than 30 percent below where it was a year ago, when the tax credit was in effect and enticing buyers. The May downturn sent applications tumbling to 13-year lows.

"While it is clear that purchase applications in May dropped sharply as a result of the tax credit induced increase in applications in April, it is unclear whether we are seeing the beginnings of a rebound now," said Michael Fratantoni, the trade group's vice president of research and economics.

We'll just have to wait and see. It's that sort of year.

May was a bad month for another housing indicator: new home starts, which fell 10 percent compared with April, according to the Commerce Department's latest estimates. But starts were still up vs. a year earlier.

By the way, you all have been having a lively discussion this week about the state of the housing market.

For instance, Wonk reader westside writes, "The fact that the Baltimore area market didn’t fall off a cliff like others now seems a mixed blessing. It was great we didn’t see the disaster scenarios that played out in Vegas, Orlando and other boom towns, but I almost wonder if falling off a cliff wouldn’t have spared some of those now barely treading water the uncertainty of being stuck in the current limbo. When your house drops 50% in value almost overnight you have no choice but to make peace with the fact that you’ll never find a conventional buyer and you either have to stay put or let it go into foreclosure. When you lose a few percent here and a few percent there every few months over the course of a couple years, as we have around here, the options aren’t as clear."

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (2)
Categories: Mortgages
        

Comments

I think this is just because of the seasonal adjustment combined with low mortgage rates. There also could be an indirect effect of the expired credit. It could have prompted many buyers to start looking, they might have seen something they liked but didn't make an offer before the credit expiration. Now, when the prices have been reduced, the sales are going through again.

Hi, Jelena -- the unadjusted number rose 17.4 percent, so seasonal adjustment is actually driving the figure downward. But I could definitely imagine the indirect credit effect you mentioned.

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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
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