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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (29185)3/23/2005 9:21:20 AM
From: Ramsey Su  Read Replies (1) of 110194
 
Russ,

ever since it was pointed out by the fannie economists, I have been watching the MBAA apps from a different perspective.

The purchase applications include a bunch of pre qualifications that many potential buyers submit as part of house hunting exercise to demonstrate to sellers their creditworthiness. Therefore, one needs to wonder how many of these applications are going to result in an actual purchase (loan)? The refi applications, on the other hand, should be actual apps. They should fall much faster as rates go up because the primary reasons for the refi is gone.

Furthermore, it will be interesting to see how many loans can close now, especially those not yet locked in. Would the ones looking for a fixed loan be forced to move into a hybrid, the hybrids to ARMs, the ARMs to IOs and the IOs to negative amortization?

Housing, if I remember my textbook econ 101 correctly, has a multiplier effect of around 4. In a hot market like San Diego, and southern Cal, the construction industry is still supported by all the homes still being reconstructed after the fires of 2003. When those are completed, what is left for the thousands in the construction trade? Remodels? not without refinancing. The vicious circle begins?
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