Demand for mortgages has been drying up. The Mortgage Bankers Association said today that the seasonally adjusted volume of applications in the week ended Dec. 28 was down 11.6% from a week earlier. (Yes, seasonal adjustment takes into account the fact that fewer people apply for mortgages around Christmas.) The index was down 20% from the same period a year earlier.
Breaking it down, applications for mortgages to purchase a home fell 8.5% from a week earlier, seasonally adjusted, while the refinance applications fell 15.4%.
Keep in mind that the 20% drop in applications from a year ago probably understates the true decline in demand for mortgages, because those people who really do want a mortgage are submitting more applications now since standards have tightened.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.