Increased Mortgage Applications In Spite Of Stringent Guidelines
The housing market has witnessed an increase in mortgage applications since mortgage rates are at their lowest levels in decades, with individuals looking to benefit from the lower prices.
This news comes about in the face of lingering unemployment and stricter guidelines for home loans.
While at first glance this might appear to be really good news for struggling market, it is not quite what it fist seems to be since despite mortgage applications rising, the number of mortgage applications for buyers looking to purchase a house is very low even now..
The increase has in fact occurred since homeowners are applying for mortgages to refinance their houses to benefit from the low rates, in fact some 80% of mortgage applications account for refinancing.
Mortgage applications for new purchases stay low for a number of reasons.
Firstly, since the subprime loan crisis, lenders have come under much stricter guidelines when it comes to the approval of loans.
This means that lesser people currently qualify for a loan than before.
Additionally, high unemployment means that fewer people are in a financial position to go ahead with any large purchases and unless extra jobs could be generated these figures may stay low.
Another contributing factor is the effect that the first time home buyer tax credit had on the market since the tax credit encouraged buyers to bring forward their decision to purchase a house from later in the year.
This obviously means that the people who might have been purchasing a home now have already done so.
Decreasing home value is also one more contributing factor to the low number of mortgage applications for new home purchases, as potential buyers delay their decision to buy until the housing market improves.
It is not all bad news however.
The figures could, actually, be looked on rather positively.
Although few individuals are looking to enter into the housing market, the people who are refinancing have the potential to kick start several areas of the commodity.
After refinancing their homes, the people who have done so would find themselves with a sum of money which could not only be used to pay existing debts, but they would even have cash to spend.
This spending will increase the flow of capital within business and commerce.
An increase in business and productivity will lead to generating additional jobs since employers need more employees to keep up with the additional demand.
This reduction in unemployment will have a snowball effect as more individuals will now have money to spend, resulting in further increases in the amount of money that is available.
If the economy improves in this manner then it would almost certainly result in improved home sales and the housing market would witness a recovery.
If this additional disposable cash in the hands of the people who are refinancing their houses reaches the open market as is anticipated, then a poor housing market could inadvertently be the catalyst for a full financial recovery.
This news comes about in the face of lingering unemployment and stricter guidelines for home loans.
While at first glance this might appear to be really good news for struggling market, it is not quite what it fist seems to be since despite mortgage applications rising, the number of mortgage applications for buyers looking to purchase a house is very low even now..
The increase has in fact occurred since homeowners are applying for mortgages to refinance their houses to benefit from the low rates, in fact some 80% of mortgage applications account for refinancing.
Mortgage applications for new purchases stay low for a number of reasons.
Firstly, since the subprime loan crisis, lenders have come under much stricter guidelines when it comes to the approval of loans.
This means that lesser people currently qualify for a loan than before.
Additionally, high unemployment means that fewer people are in a financial position to go ahead with any large purchases and unless extra jobs could be generated these figures may stay low.
Another contributing factor is the effect that the first time home buyer tax credit had on the market since the tax credit encouraged buyers to bring forward their decision to purchase a house from later in the year.
This obviously means that the people who might have been purchasing a home now have already done so.
Decreasing home value is also one more contributing factor to the low number of mortgage applications for new home purchases, as potential buyers delay their decision to buy until the housing market improves.
It is not all bad news however.
The figures could, actually, be looked on rather positively.
Although few individuals are looking to enter into the housing market, the people who are refinancing have the potential to kick start several areas of the commodity.
After refinancing their homes, the people who have done so would find themselves with a sum of money which could not only be used to pay existing debts, but they would even have cash to spend.
This spending will increase the flow of capital within business and commerce.
An increase in business and productivity will lead to generating additional jobs since employers need more employees to keep up with the additional demand.
This reduction in unemployment will have a snowball effect as more individuals will now have money to spend, resulting in further increases in the amount of money that is available.
If the economy improves in this manner then it would almost certainly result in improved home sales and the housing market would witness a recovery.
If this additional disposable cash in the hands of the people who are refinancing their houses reaches the open market as is anticipated, then a poor housing market could inadvertently be the catalyst for a full financial recovery.
