Those who borrow, aren't doing it ... those who don't have to borrow don't apply

Source: Calculated Risk

Access to credit is locked up in a deleveraging economy's aversion to risk, period. People who could get loans are hesitant to do so because the gains they make on interest rates could be lost in a continuing decline in the value of their property purchase. It's only the purchase-for-cash-and-holders who have cash burning holes in their pockets, anxious to be put to use. In noting the status on mortgage applications for purchases in the latest period reported by the Mortgage Bankers Association, Calculated Risk's Bill McBride writes, "Refinance activity increased as mortgage rates fell to the lowest level since December 2010. The four-week average of purchase activity is at about 1997 levels, although this doesn't include the very high percentage of cash buyers. This suggests weak existing home sales through June (not counting cash buyers)."

The MBA reports: Latest MBA Weekly Survey Shows Increase in Mortgage Applications, Driven by Refinances


The Refinance Index increased 6.0 percent from the previous week. The seasonally adjusted Purchase Index increased 0.3 percent from one week earlier.
...
The average contract interest rate for 30-year fixed-rate mortgages decreased for the third consecutive week to 4.76 percent from 4.80 percent, with points decreasing to 0.76 from 1.00 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the lowest 30-year fixed contract rate since December 3, 2010.

Refinance activity increased as mortgage rates fell to the lowest level since December 2010.

The four week average of purchase activity is at about 1997 levels, although this doesn't include the very high percentage of cash buyers. This suggests weak existing home sales through June (not counting cash buyers).

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