Refinances Dominate Market

I read an interesting article this morning, about mortgage loan market share (I know, who really thinks that is interesting).  What struck me was the actual number of refis taking place vs. purchases.

The current number is 81.2% of all mortgage loan applications are for refis.

I realize that homeowners are taking advantage of all time low rates, and that makes perfect sense.  But where are the buyers?

I’ve seen several reports (written recently) telling the tale of rising property values, and increased home sales (albeit in certain markets).

Are these reports accurate?  Are they true?

The most recent numbers (see article mentioned) show a nationwide purchase market that has declined since 2008 (slightly flattening in the last 2 years), and a refi market that spikes and plummets – directly correlated with rates.  Right now, refis are spiking as mortgage rates are at all time lows.

Buyers are obviously not ready to pull the trigger just yet.

Some economists believe that housing will pull us out the doldrums.  They claim that every new house sold creates something like 7 new jobs.

But is this a realistic expectation?

Aren’t buyers (or potential buyers) waiting for a more stable economy?  Can we expect people to make a huge investment/commitment in a new home, when they feel uncertain about their income or job?

Yes, the housing market is a huge part of our country’s GDP.  It is a large driver in our economy.  But until people can feel good about their jobs and income again, I don’t see the purchase of housing leading us out.

Do you have an opinion about this?  Please leave a comment.

 

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