The refi business continues to slow down. According to the Mortgage Bankers Association of America, 30-year rates now stand at 5.37% up from 4.99% just three weeks ago. In turn,
its measure of demand for refinancings, the refinancing index, fell 21.3 percent to 6,768.3, while its gauge of demand for loans to buy a home, the purchase index, fell 5.5 percent to 414.1.It looks like the housing boom is coming to a certain end, with uncertain implications for the overall economy.
It seems a safe assumption that the refi business will cool considerably. With unemployment high and going higher and consumer bankruptcies growing as well (see previous posting), lenders have to keep lending to stay ahead of the defaults. But the housing lending market is saturated now, and demand for housing loans has dropped off precipitously. This is especially true for refi loans which have fueled the US consumption binge since 2000 in the face of falling interest income, falling stock prices and a sharp slowdown in wage growth.
Without refi, how will the American consumer continue to consume?