US Mortgage Applications Fall

By Stewart Douglas

The number of mortgage applications in the US fell last month, according to figures released by the Mortgage Bankers Association.

The Mortgage Bankers Association applications index fell to 609.0, hitting a five-month low figure on the number of new applications for home buying mortgages. 

The calculation, which takes into account seasonal variation, reflects the number of mortgage applications made by consumers over a given period of time, and can be seen as a general indicator of the health of the US housing market.

However, the indexed figure over the last four week period has hit a particular low despite the reduced cost of mortgages brought on by falling interest rates.

The cost of borrowing on a 30 year mortgage, with fixed interest rates was calculated at just below 6.6%, showing a fall of around 0.02% over the course of the last week. 

Additionally, central interest rates currently rest at just 6.69%, compared to a more significant figure last year.

The figures highlight a downturn in demand for housing in the US after the well documented housing market crisis, with experts now claiming it could take several years for the US housing market to regain confidence.

Angelo Mozilo of Countrywide Financial Corp. suggested that the housing market could remain stagnant until 2009, as a result of excessive supply and overly lenient lending practices in the sub-prime lending market.

The CEO of Countrywide Financial Corp., the largest mortgage lending institution in the US, is quoted as claiming the market will require at least two years to turn the corner and begin to show signs of improvement.

Despite reduced interests rates which were designed to boost the flailing US economy, and inject more growth into consumer spending, housing seems to have actually fallen over the last month - news which many industry experts find alarming.