It’s a big drop actually, too, when you start looking at the charts comparing it to 2008, you go, something’s different this time. So let’s get into this story. A key measure of home purchase applications slumped over the holidays despite a sharp drop in mortgage rates over the course of December. Now let me stop and say that seasonal adjustments for real estate are totally normal, right? This is the slow time of the year.

However, it shouldn’t be slow when buyers have been so stressed out and frustrated over the last handful of months because of high mortgages. Right? When all of a sudden there’s a drop or reprieve in the price, you would think that people would flood into the market and jump in to purchase homes, but that is not the case now, it says the Mortgage Bankers Institute index of mortgage applications fell 9.

4% for the week ending December 29, compared with two weeks earlier, according to new data published Wednesday. The data also showed that the average rate on the popular 30 year fixed loan ended the year at 6. 76%. While that’s still down from its peak of 8% in October, it is slightly higher than it was the previous week. Now, markets continued to digest the impact of slowing inflation and potential rate cuts from the Federal Reserve, helping mortgage rates to stay at levels close to the lowest since mid 2023.

This is from Joel Khan, MBA’s deputy chief economist. He goes on to say the recent decline in rates was given, or has given the housing market some cause for optimism going into 2024. But purchase applications have not yet picked up in response. So it’s real fun. You could have hope in one hand and reality in the other for lack of better terms. And let’s see which one fills up first.

You can have a handful of crap and that’s it. You can have hope. You have any other, but it’s just empty. And so that’s what they’re referring to really. Now, it says housing demand remained muted even with the recent drop in rates. Applications for a mortgage to purchase a home dropped 5% from two weeks earlier. Application volume is down 12%, compared within the same time last year. Demand for refinancing also fell last week, declining 18% from the previous two weeks, according to the survey.

Compared with the same time last year, refinance applications are up about 15%. Now remember, there’s only two people that are refinancing right now, the fools that bought mortgages at 8% because they were scared, and now they’re refinancing at 6. 76% or something like that. Or people that are doing cash out refis for debt consolidation. And that gets really serious, it says. The interest rate sensitive housing market has cooled rapidly in the wake of the Federal Reserve’s aggressive tightening campaign.

Policymakers lifted the benchmark federal funds rate eleven consecutive times over the past two years in an attempt to crush stubborn inflation and slow the economy. However, many economists believe the central bank is done raising interest rates, which has helped to bring down the painfully high mortgage rates. Look, I’ll be honest with you. I think that rates are going to dip just a little bit and then they’re going to skyrocket past that.

Higher rates, they say, have not only dampened consumer demand over the past year, but also severely limited inventory. That’s because sellers who locked in a low mortgage rate before the pandemic have been reluctant to sell, with rates continuing to hover near a two decade high, leaving few options for eager would be buyers. The housing market has been hampered by a limited supply of homes for sale. But the recent strength in new residential construction will continue to see to help ease inventory shortages in the month to come.

And that’s from Khan. I don’t think many people are really paying attention to the reality. And that is the consumers tapped. They’re ticked off, they’re frustrated, they’re angry, they’re bitter at some of this stuff that the government’s doing as far as spending money and what the Federal Reserve was doing with raising these rates and honestly caused the inflation in the first place, ultra low rates and the money getting spent like crazy when everything came closing down around the world.

Hope you got something out of this. Thank you so much for watching. The economic ninja is out. Bye. .