Demand for home mortgage loans appears to be falling; maybe that’s because a growing number of consumers today are more worried about debt consolidation than they are about buying a new home. After all, the national unemployment rate is showing few signs of falling. It’s hard for consumers to think about adding the burden of a monthly mortgage payment when they’re worried that they won’t have a job two weeks or a month from now. That’s why the news from the Mortgage Bankers Association that fewer consumers are applying for mortgage loans should not come as a surprise to anyone.
Home Buying Down?
The bankers association reported that for the week ended May14, mortgage loan applications fell 27 percent from one week earlier. This brought the number of new loan applications to its lowest point in 13 years. Over all, applications have fallen nearly 20 percent in the last month, according to the bankers. Real estate economists wonder if this is the rest of the demise of the first-time and move-up buyers housing tax credits, both of which expired at midnight on April 30. The first-time buyers credit provided buyers who were purchasing their first homes a credit of $8,000. The move-up buyers credit provided other buyers a credit of $6,500 when they bought a house. Real estate agents pointed to the credits as a big reason why housing sales were up during the latter half of 2009 and the first half of 2010. Now they worry that without it, sales will fall.
It seems, though, as if there are bigger reasons why mortgage loan applications have fizzled. People are worried about their jobs. They’re worried about their mounting debt and whether it will send them toward a high-interest-rate debt consolidation loan. They also worry that everything from gas to groceries to milk seems to be getting more expensive while their bosses have put a freeze on pay raises. Others look at a dwindling yearly income, thanks to forced unpaid days off, and wonder how they’re going to pay the bills they already have. A new mortgage seems like an awfully big luxury to these people.
The recession is officially over, and there have been positive signs that the economic recovery is still proceeding. Problem is, it doesn’t feel like much of a recovery to many people. When you’re calling debt consolidation companies to judge their rates, you certainly don’t feel as if things are getting better. Real estate agents and mortgage loan officers, then, shouldn’t be surprised if demand for their services starts to wane again.