Mortgage origination data has been up and down, with housing recovery advocates pointing to the positive “up” numbers and recovery detractors pointing to the “down” numbers. In truth, a big jump up in mortgage originations isn’t anything to clap about, any more than a drop in originations is especially telling.
What is telling is where we are in the overall mortgage credit picture.
According to the Mortgage Bankers Association, mortgage applications last week were approximately 43% below the same week back in October 1998. At the peak of the credit bubble, applications were twice the level they were in the same 1998 period.
The MBA’s credit availability index came in at 116 in September, the lowest level since the 2008 crisis. The index peaked in 2006 at a staggering 900.
A new standards-based, credit availability index constructed by CoreLogic, points to 2014 as the toughest year in terms of standards since, again, all the way back to 1998.
It’s been well-documented that the rise in housing since the mortgage meltdown has mostly been attributed to cash purchasers, many of them from overseas. There are also the institutional buyers who raise billions of dollars in the bond market to buy housing stock to rent homes and eventually package rental properties into securitized pools.
Without sufficient mortgage credit availability the incipient, already overblown housing recovery will hit a wall and likely reverse course.
When the former Chairman of the Federal Reserve can’t get a mortgage, there’s trouble ahead for housing. (NORM ‘n’ AL Note: Ben Bernanke, former head of the Federal Reserve, recently applied to refinance his Washington townhouse residence, worth nearly a million dollars according to Zillow, and his application was denied. The former Most Powerful Man in the World, who at the Fed dished out trillions of dollars to banks, admitted last week, “I recently tried to refinance my mortgage and I was unsuccessful.”)
[by Shah Gilani, writing for MONEYMORNING]
As always, posted for your edification and enlightenment by
NORM ‘n’ AL, Minneapolis