US Mortgage Applications Drop To Lowest Level Since 1997 (And The Fed Still Hasn’t Unwound Its Enormous Balance Sheet!)

Mortgage application volume dropped and remained at a multi-decade low last week (back to 1997), led by an 8 percent decline in refinance applications, which now make up only 30 percent of all applications. Purchase applications have declined in eight of the last nine weeks, as demand continues to shrink due to higher rates and a weaker economic outlook.

Mortgage applications decreased 3.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 26, 2022.

The unadjusted Purchase Index decreased 4 percent compared with the previous week and was 23 percent lower than the same week one year ago.

The Refinance Index decreased 8 percent from the previous week and was 83 percent lower than the same week one year ago.

Just wait for The Federal Reserve to start unwinding its enormous balance sheet!

Unfortunately, Powell and Company don’t have a …

US 30yr Mortgage Rate Rises To Near 6% Housing Affordability WORST Since 2006 Housing Bubble (Yield Curve Remains Inverted)

Baby, let me take you home is getting more difficult as mortgage rates approach 6%.

The National Association of Realtors’ Homebuyer Affordability Index for fixed-rate mortgages is now at the lowest reading since 2006 and the peak of the 2005-2007 housing bubble that burst catastrophically.

The reason? The Federal Reserve, in their attempt to put out the inflation fire (caused by 1) excessive monetary stimulus since late 2008, 2) rampant Federal spending and 3) Biden’s green energy policies, driving up prices.

If we compare mortgage rates with the US Treasury 10Y-2Y yield curve, you can see that the yield curve remains inverted (historically a bad sign). This may signal an eventual loosening of monetary policy by March 2023.

US July Inflation Remains Hot (CPI At 8.5% YoY) While Real Weekly Wage Growth Remains Burned (-3.6% YoY) Mortgage Refi Apps Down -82% YoY While Mortgage Purchase Apps Down -19% YoY)

The US July inflation report remains hot, hot, hot! While mortgage purchase and refinancing applications are not, not, not.

The US consumer price index rose 8.5% in July. And real average weekly growth remains burned by horrid inflation, at -3.6% YoY.

Source of inflation?

Headline inflation above estimates in 14 of last 16 months.

Data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 5, 2022 revealed that … the Refinance Index increased 4 percent from the previous week and was 82 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 19 percent lower than the same week one year ago.

Mortgage applications are NOT hot, hot, hot.

US Treasury Yield Curve Descends Further Into Darkness (-48.4 BPS) As Supply Of Homes Increases 30.7% In June (Fed Is Cooling Off Housing Market)

The US Treasury 10Y-2Y yield curve is descending further into darkness (aka, inversion).

The 10Y-2Y yield curve hit the worst inversion since 2000 as the curve slope hit -47.7 basis points, inverting another -2.267 basis points today.

Yes, the 10Y-2Y Treasury yield curve is SCREAMING RECESSION.

(Bloomberg) – Prashant Gopal – The supply of homes for sale across the US grew at a record rate last month, another sign that higher mortgage costs are cooling down the housing market.

The number of active listings nationwide jumped 31% from a year earlier, a record-high increase for a third straight month, according to a report Tuesday by Realtor.com.

And according to Redfin, stale inventory is accelerating.

The Federal Reserve is no friend of the US middle class and low wage worker.

Heartaches By The Number! Mortgage Applications Declined For Third week In A Row, Lowest Level Since 2000 (Applications DOWN -71% Under Biden, Mortgage Rates UP 99%)

Heartaches by the number!

Mortgage applications declined for the third week in a row, reaching the lowest level since 2000.

Mortgage applications decreased 6.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 15, 2022.

The Refinance Index decreased 4 percent from the previous week and was 80 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 7 percent from one week earlier. The unadjusted Purchase Index increased 16 percent compared with the previous week and was 19 percent lower than the same week one year ago.

Heartache #1: Mortgage rates have risen 99% under Biden.

Heartache #2: Mortgage application have fallen -71% under Biden.

As The Federal Reserve continues to fight inflation caused by 1) excessive stimulus by The Federal Reserve and Federal government surrounding Covid and 2) Biden’s energy policies, we are seeing the mortgage market as collateral damage.

Simply Unaffordable? Or Is The Fed Killing-off Housing In Its Quest To Crush Inflation? (REAL Home Price Growth Is 12% YoY While REAL Wage Growth Is -3.95% YoY)

Housing in the US is simply unaffordable for the middle class and low-wage workers. Combine rising food costs and gasoline/heating costs, and we have an economic disaster on our hands.

US existing home sales for June will be released on Wednesday. But can The Fed kill-off home price inflation?

A preliminary analysis of existing home sales for June is for a seasonally adjusted annual rate of 5.1 million, down 5.4% from May and down 14.2% from last June. As The Fed cranks up its target rate (green line) and eventually shrinking its balance sheet, we will see further shrinking of existing home sales this summer.

But home price inflation remains high (Case-Shiller National home price index at 21.23% YoY, Zillow’s rent index at 14.75% YoY) while the Consumer Price Index YoY is at 40-year high of 9.1% YoY. In other words, home price inflation is 233% of the stated inflation rate from Uncle Sam.

May’s existing home sales report was … sobering. There is still historically low levels of available inventory and median sales price of existing home sales was 14.64% YoY. Of course, the alternative to ownership is renting which is growing at 14.75% YoY. Simply unaffordable.

The gap between REAL home price growth (12.13% YoY) and REAL average hourly earnings (-3.95% YoY).

Consumer sentiment for housing is near the lowest level since 1982.

The Fed seems determined to remove the punch bowl in its efforts to crush inflation. But will The Fed’s efforts also crush the housing and mortgage market?

Darkness, Darkness! Recession Fears Push Mortgage Rates Down And MBA Purchase/Refi Applications Up (Home Prices Up 20.9% YoY In May)

Biden’s new campaign theme for the midterms: economic darkness, darkness.

Well, this is one way to get inflation under control … crash the economy. And inflation fears growing, we are seeing mortgage rates declining and mortgage applications increasing.

Mortgage applications decreased 5.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 1, 2022. This week’s results include a holiday adjustment to account for early closings the Friday before Independence Day.

The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index increased 7 percent compared with the previous week and was 17 percent lower than the same week one year ago.

The Refinance Index decreased 8 percent from the previous week and was 78 percent lower than the same week one year ago.

In May, CoreLogic’s national home price index was up 20.9% YoY. But home prices are expected to grow at a 5.6% clip over the coming year.

Today, we are seeing global sovereign debt yields declining which should help US mortgage rates decline further.

And the US Treasury yield curve (10Y-2Y) continues to invert, signaling recession.

Under Bidenflation, we will be forced to eat the daisies instead of meat.

Fed Is ‘Just at the Beginning’ of Raising US Rates, Mester Says, MBA Mortgage Purchase Applications Drop -21% WoW As Rates Rise (Mester Channels The Carpenters)

Cleveland Fed’s Mester is channeling The Carpenter’s song “We’ve only just begun … to raise rates.”

Financial markets are anticipating what Mester is saying: rapidly rising interest rates. But as you can see from the following chart, gasoline prices (orange line) are driving rising US prices. So it is doubtful that monetary tightening will slow price increases. But Mester and company can only control monetary stimulus.

Mortgage rates have soared as The Fed attempts to crush inflation. And mortgage purchase applications fell -21% WoW in the most recent Mortgage Bankers Association survey.

The Refinance Index increased 2 percent from the previous week and was 80 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 0.1 percent from one week earlier. The unadjusted Purchase Index decreased 21 percent compared with the previous week and was 24 percent lower than the same week one year ago.

It almost seems like Mester is following the Taylor Rule (not really). But using CPI YoY, the Taylor Rule is saying that The Fed Funds Target Rate should be … 22.10%. It is only 1.75% after years of excessive stimulus following the banking crisis of 2008/2009. And Yellen who seemingly never met a rate hike that she liked.

If we use core PCE as our measure of inflation, the Taylor Rule is still high at 13.25%, a whopping 11.50 spread over the current target rate.

Will The Fed drive up rates and risk a recession ala Paul Volcker? Are we sitting on top of the world or about to get fried?

Bear in mind that gasoline prices are up 104% under the Biden Administration and mortgage rates are up 105%.

Mr Freeze! Existing Home Sales Drop -3.39% MoM In May, Median Price Growth At 14.8% YoY, Inventory Rises Slightly As Fed Stimulus Continues

Rising energy prices, rising home prices, rising mortgage rates, declining hope.

But as The Federal Reserve begins to withdraw it Covid stimulus, existing home sales declined -3.39% in May from April.

But like Covid itself, The Fed’s outrageous monetary stimulus is still in place, helping caused median home prices to rise 14.8% YoY. And inventory for sale is rising, but still remains low.

Jointly, Treasury Secretary Yellen and Fed Chair Powell are “Mr Freeze.”

Fed’s Limbo Rock! Mortgage Purchase Applications Drop 18% WoW (And -21% YoY), Refi Applications Drop 6% WoW (And -75% YoY) How HIGH Can They Go??

Its The Fed’s Limbo Rock! Except that it is how HIGH can they go? Mortgage rates have soared 71.4% over the past year as The Fed signals tightening of monetary policy.

Mortgage applications decreased 6.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 3, 2022. This week’s results include an adjustment for the Memorial Day holiday.

The seasonally adjusted Purchase Index decreased 7 percent from one week earlier. The unadjusted Purchase Index decreased 18 percent compared with the previous week and was 21 percent lower than the same week one year ago.

The Refinance Index decreased 6 percent from the previous week and was 75 percent lower than the same week one year ago.

In related news (debt), consumer debt is rising at 7.5% YoY while the personal savings rate plunged to 4.4% in May as consumers borrow more and save less to cope with inflation.

How HIGH can The Fed go?