Wednesday, July 07, 2004

The Bank of England has spoken openly about using higher interest rates to try to deflate the UK housing bubble. If the Fed hoped to use the same ice machine to cool the bubblicious US housing market (I grant you, a big 'if'), it has been sorely disappointed.
New applications for U.S. mortgages jumped last week on a sharp decline in mortgage rates, which sparked a resurgence in refinancings and home purchases, an industry group said on Wednesday.

Interest rates on 30-year mortgages, the mostly widely held type of home loan in the United States, sank below 6 percent for the first time since mid-April, the Mortgage Bankers Association said.

The Washington-based group said its seasonally adjusted market index, a measure of mortgage activity, climbed for the week ending July 2 by 19.5 percent to 687 -- its highest level in nearly two months -- from the previous week's 575.
Part of the answer to this curious turn lies with this:

The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.96 percent from 6.21 percent one week earlier
combined with this:

The adjustable-rate mortgage (ARM) share of activity increased to 34.1 percent of total applications from 33.9 percent the previous week.
It's not just the attraction of lower 30-year fixed-rates. It's also rising adjustable-rate activity directly in the face of a rising federal funds rate. It looks like Americans really are taking Uncle Alan's advice, crazy as it is.

3 Comments:

At 11:59 AM, Blogger Chibi said...

Yeah, it's something, isn't it? I put a little nugget along these lines in my blog a few days back more specific to the SF Bay Area and the numbers there will make your jaw hit the floor. Go take a peek.

 
At 7:04 PM, Anonymous Anonymous said...

Two words: panic buyers. I got 'em comming out the ears in my office.

Also, the speculators started comming in about 3 months ago and it looks like they're still at it.

vachon

 
At 11:31 PM, Blogger alberthaanstra said...

Hi Blogger! Ik ben op zoek naar hypotheken Zou Afab echt zo goed zijn als iedereen beweert? Of kan ik beter zoiets als Geldshop proberen?

Groetjes Albert

 

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