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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (48546)3/23/2006 1:32:52 PM
From: regli  Read Replies (4) of 116555
 
My theory is as follows. Silicone Valley is on an upswing. This benefits the higher end property buyers. At the low end because appreciation is not guaranteed anymore, people are really worried about getting into such huge commitments where they can barely afford the payments. The news about the bubble popping is making the rounds in the media.

On the anecdotal front, I just reviewed some of my subprime lender customer's stats and what is interesting and seems to confirm the above is that applications and calls are increasing, credit checks pass at a similar rate, there is a slight down trend in appraisals panning out especially starting with January. However, the most startling impact is seen in the "call/application to close" ratio which dropped more than 50% since Sept 05. Note that approx. 75% of their business is refinancing.

Obviously, there could be several reasons for this, some of them business specific. Changed marketing message, internal call script changes were cited, etc. However, what impressed me was the correlation between their total lending figures and inventories reported on these threads. Sept 05 was clearly the high in lending with a slight drop-off for the next two months and then a severe drop of about 35% from the high. I don't have February figures for lending.
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