NewsMine — economy — united-states — 2004 — 2004-apr-may — Viewing Item

Mortgage applications drop as home buying slows Original Source Link: (May no longer be active)    http://quote.bloomberg.com/apps/news?pid=71000001&refer=us&sid=axTGQqVG8JtE http://quote.bloomberg.com/apps/news?pid=71000001&refer=us&sid=axTGQqVG8JtE U.S. Mortgage Applications Drop as Home Buying Slows (Update4) ?? May 19 (Bloomberg) -- An index of U.S. mortgage applications fell 12 percent last week as home purchases slowed for the first time in more than a month and loan refinancing dropped to the lowest level since early January. The Mortgage Bankers Association said its gauge of loan demand fell to 654.1 from 742.2. It was the second-straight decline in the index and came as 30-year mortgage rates exceeded 6 percent for a fourth consecutive week. ``The general trend is going to be continued weakness in refinancing, and purchases will probably hit a lower plateau and stay there,'' said Carl Steen, analyst at Maria Fiorini Ramirez Inc., a New York-based forecasting firm. Rising mortgage costs are cooling the pace of home buying, economists and builders say, though an accelerating economy and improving job prospects may limit the slowdown. Mortgage rates generally move with yields on long-term debt such as 10-year Treasury notes, which have risen almost a percentage point since late March as reports of economic gains fuel inflation concerns. The group's home purchases index, which fell 8.1 percent to 454.2 from 494.3, is still close to the all-time high of 501.6 reached in January and exceeds last year's average of 395.1. Broaddus Comments Federal Reserve Bank of Richmond President J. Alfred Broaddus said yesterday that the U.S. central bank will have to meet rising inflation risk through a policy of ``measured'' increases in interest rates. There are concerns rising rates ``might undermine the expansion's increased momentum,'' Broaddus said, noting that loan refinancing applications have dropped as borrowing costs rise. The average rate on a 30-year fixed mortgage was 6.21 percent last week, compared with a high so far this year of 6.32 percent a week earlier, the group said. Rates last were above 6 percent for three weeks or more in August. Last year, the 30-year rate averaged 5.68 percent. The association's index of refinancing applications tumbled 17 percent to 1816.9. The index hasn't been lower since 1775.4 in the week that ended Jan. 2. The purchase index last declined in the week ending April 9. At the current 30-year rate, borrowing costs on a $100,000 loan would be $613.12, compared with $536.12 when the rate was at an all-time low of 4.99 percent in June. Housing Demand U.S. housing starts declined 2.1 percent in April as rains deterred some builders in the West, a government report yesterday showed. Building permits rose 1.2 percent, suggesting that rising mortgage rates have yet to significantly cut demand for new homes. ``Our sales are as steady and solid as ever right now,'' said Ara Hovnanian, chief executive of Red Bank, New Jersey-based homebuilder Hovnanian Enterprises Inc. ``As long as it's not a rapid rise (in interest rates), I'm not overly concerned.'' Interest rates would have to rise to about 8 percent in order to suppress housing demand, said Pete Correll, chief executive of Atlanta-based Georgia-Pacific Corp., the biggest U.S. maker of plywood. Correll made the comments in a speech at a Goldman Sachs conference in New York today. The National Association of Realtors forecasts 7.08 million new and previously owned houses will be sold in the U.S. this year, just shy of last year's record of 7.19 million. Freddie Mac, the second-biggest purchaser of U.S. mortgages, last week estimated new and existing single-family home purchases at 7.29 million this year, higher than the 7.27 million it projected a month earlier. Builder Optimism The Washington-based National Association of Home Builders said Monday that its index of U.S. homebuilder optimism was unchanged at 69 this month, holding above its six-month average. ``The boom in refinancing is in the rear-view mirror,'' said James B. Nutter Jr., chief executive of James B. Nutter & Co., a private mortgage company based in Kansas City, Missouri, in an interview. ``Things will slow a bit, but I don't expect housing to fall off the table.'' Implied yields on federal funds futures contracts suggest investors expect the Fed's policy making Open Market Committee to raise its benchmark overnight bank lending rate at its June 30 meeting. The committee left the rate at 1 percent on May 4. Broaddus said the Fed won't have to act as aggressively as it did in 1994, when rates were rising as the economy strengthened and inflation expectations rose. In 1994 ``we had not yet achieved price stability,'' Broaddus said. ``Most importantly, in 1994 we had not yet established the full credibility for our low inflation strategy that I believe we have today.'' The yield on the benchmark 10-year Treasury note rose 4 basis points to 4.78 percent as of 11:52 a.m. in New York.

Asain stocks plunge on rate hike fears Bank of america cuts 12k jobs Big drop in us job claims Bubbling us inflation boosts talk of fed rate rise Buffet warns inflation heating up { May 3 2004 } Bush job growth helped by supermarket strike ending { April 3 2004 } Consumer prices rise heightening inflation concern { April 14 2004 } Consumer prices rise more than expected causing inflation Dollar slide as job claims less than forecast Dow slumps below 10 thousand Fired workers train their replacements in india { April 6 2004 } Four hundred thousand gave up looking in february { March 11 2004 } Greenspan reiterates stern deficit warning { May 6 2004 } Greenspan warns of deficit as big threat to economy { May 7 2004 } Homeless vets of iraq { April 24 2004 } IMF warns housing prices asset bubble { April 23 2004 } Inflationary pressures build Lower market blamed on job growth { May 7 2004 } Markets falter amid fears over us rate rise { May 10 2004 } Military families on food stamps Milk prices expectd to drop to normal Mortgage applications drop as home buying slows Pay in england grows as unemployment falls { April 16 2004 } Stocks bond gold sink on china fears Stocks fall on good jobs report Stocks hit 2004 lows Summer teen jobs scarce Trade deficit widens as follar falls Unemployment rise 30 thousand april week { April 16 2004 } Us trade deficit hits record as imports increase Weak dollar oil prices shatter the global economy { March 24 2004 } Files Listed: 31

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