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Economy Title: U.S. MBA Mortgage Applications Index Fell 1.9% Last Week March 17 (Bloomberg) -- Mortgage applications in the U.S. fell last week, led by a slump in purchases, a sign an extension of a tax credit for homebuyers has yet to spur demand. The Mortgage Bankers Association’s index decreased 1.9 percent in the week ended March 12. The Washington-based group’s purchase gauge fell 2.3 percent, while its refinancing measure declined 1.7 percent. The lack of demand even as borrowing costs dropped signals a sustained housing recovery will be slow to develop this year. Federal Reserve policy makers yesterday cited stagnant home construction, declines in commercial real estate and a lack of jobs as risks that continue to face the world’s largest economy. “People are holding back, we’re in a flattish market,” Brian Bethune, chief financial economist at IHS Global Insight in Lexington, Massachusetts, said before the report. “Once the economy gets more momentum, particularly once you get jobs created, then this market could pick up.” The average rate on a 30-year fixed loan fell to 4.91 percent, the lowest since December, from 5.01 percent the prior week, the group said. The rate reached 4.61 percent at the end of March 2009, the lowest since the association’s records began in 1990. At the current 30-year rate, monthly payments for each $100,000 of a loan would be $531.33, little changed from $531.94 a year ago, when the rate was 4.89 percent. Rates Fall The average rate on a 15-year fixed mortgage declined to 4.24 percent from 4.32 percent. The rate on a one-year adjustable mortgage decreased to 6.75 percent from 6.80 percent. As lending costs fell, the share of applicants seeking to refinance a loan rose to 67.3 percent from 67.2 percent. The housing market continues to struggle. Existing home sales dropped 7.2 percent in January after falling 16 percent in December, the biggest declines since comparable records began in 1999, according to figures from the National Association of Realtors. Housing starts in February were down 75 percent from their January 2006 record. The government extended a tax credit for first-time buyers in November, and expanded it to include some current owners in a bid to support the market that precipitated the worst recession since the 1930s. The end this month of the Fed’s plan to keep lending rates low through purchases of mortgage debt may cause borrowing costs to rise in coming months. While the economy is growing, it is not yet generating enough jobs to spur household formation and home purchases. Fed Policy Fed officials yesterday repeated their pledge to keep the main interest rate near zero for an “extended period” and confirmed that emergency measures to prop up the housing market will end as planned this month. While the economy has “continued to strengthen,” policy makers noted that “housing starts have been flat at depressed levels” and “employers remain reluctant to add to payrolls,” policy makers said in their statement. Homebuilders are cautious about taking on new projects as mounting foreclosures add to inventory and the looming expiration of the tax credit for contracts signed by the end of April and closed by June 30. Executives at Hovnanian Enterprises Inc., New Jersey’s largest homebuilder, are among those waiting to see if demand will hold up after the incentive fades. The Red Bank, New Jersey-based company this month reported its first quarterly profit since 2006. “With the tax credit for first-time and repeat buyers expiring at the end of the second quarter, we too are interested to see if the positive momentum that we established can be sustained,” Chief Executive Officer Ara Hovnanian said on a conference call with investors on March 3. “We’re keeping a close eye on this as we head into the summer months.”
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#1. To: war (#0)
In answer to your question in another thread: This is a sign of a dying economy.
#2. To: Nebuchadnezzar (#1)
Yes, it is.
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