WASHINGTON (4/28/14)--As the final punctuation mark on a week full of disappointing housing reports, Inside Mortgage Finance, a trade magazine, reported at the end of last week that mortgage lending had fallen to its slowest pace in 14 years.
Even during the weakest moments of the financial crisis, lenders were busier than they are now (Los Angeles Times April 25).
With $235 billion in mortgage loans originated in the first quarter, or 58% less than the same quarter in 2013, and 23% less than the final quarter of last year, economists are seeing a consistent downward trend of housing demand in the market (Wall Street Journal April 24).
"A strong housing rebound is an important component of most forecasts that suggest that GDP growth will be stronger than the economy's 'potential' rate over the next two years," Eric Rosengren, Boston Fed president, said in the Wall Street Journal.
The overall decline in loan demand has been fueled in large part by the pull back in refinancing, which has fallen 75% in the first quarter year-over-year.
But applications for purchase mortgages also fell last week to levels 18% below last year at this time, even though the average loan amount has climbed to a record high of $280,500, according to the Mortgage Bankers Association.
Economists also pin the weak housing market on the many consumers who still either can't borrow to buy homes because of high debt, damaged credit or too little income, according to the Wall Street Journal.
Meanwhile, the average 30-year fixed mortgage rate has climbed to 4.5% as of two weeks ago, almost a full point higher than May of last year.
Stan Humphries, Zillow Inc. chief economist, said in the Wall Street Journal that those still-historically low rates are becoming less useful for potential homebuyers because housing prices continue to move higher.