Why Won’t Buyers Make the Leap? | Bedford NY Real Estate

Halfway through the spring buying season, mortgage applications fell 1.2 percent for the week ending May 21 and the unadjusted Mortgage Bankers Association’s Purchase Index fell even more. It was down 2 percent in just one week–15 percent lower than it was a year ago at this time.

Such a decline in borrowing to buy a home in the third week of May is virtually unprecedented, but it corresponds with the anemic sales reports from the National Association of Realtors. Sales are down year over year. April sales are down 6.8 percent from a year ago (see April Sales Disappoint). Cash sales continue to account for a large percentage of purchases and financed purchases have fallen far below normal even though it’s easier (not a lot easier) to get a mortgage today that it was during the mini-boon of a year ago.

According to Ellie Mae’s March data, purchase loans are closing in 41 days compared to 47 days a year ago, some 60.7 percent of applications for purchase loans are approved compared to 59.7 percent a year ago, and median FICO scores for successful conventional purchase loans have fallen from 761 to 755 over the past 12 months. Nothing to write home about but incremental progress.
Yet a recent survey by loanDepot suggests that despite the gradual relaxation of lending standards buyers are simply giving up trying to get a mortgage. Fear that they will not qualify for a mortgage has stopped half (50.7%) of today’s potential home buyers from pursuing the financing they need to buy a home, according to loanDepot’s national survey released last month.

The survey found plenty of pent up demand—one in three Americans (29%) say they’d like to buy a home in the next two years and 71 percent of those who want to buy a home in the next two years will need financing.


read more...


http://www.realestateeconomywatch.com/2014/05/why-wont-buyers-make-the-leap/