Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Mortgage Applications Fall 20% Over 4 Weeks

The rout in the mortgage market continues.

Since the Federal Reserve intimated at the end of May that it could soon begin to reduce its support for the economy, mortgage rates have shot through the roof. On Friday alone, the interest rate on a 30-year fixed-rate mortgage increased by the largest single-day margin in history, climbing to 4.875% in some instances. 

The result has been predictable. That is, the demand for mortgages has plummeted. According to the Mortgage Bankers Association, mortgage applications fell for the fourth consecutive time last week. They are now at their lowest level since July 2011.

The hardest hit have been applications to refinance, which are down by 26% over the last four weeks. Purchase-money mortgage volumes, by comparison, are off by only 6.9%. 

While it remains to be seen what impact this will have on stocks, and bank stocks in particular, we won't have to wait long to find out. This Friday, the nation's two largest mortgage originators, Wells Fargo (NYSE: WFC  ) and JPMorgan Chase (NYSE: JPM  ) , report earnings for the second quarter. In the first three months of this year, they underwrote a combined $162 billion in mortgages, the vast majority of which were for refinancing purposes as opposed to buying a home. 

The other sector that stands to be affected is homebuilders, the two largest of which are D.R. Horton (NYSE: DHI  ) and PulteGroup (NYSE: PHM  ) -- click here for a graphic of the five biggest homebuilders in America. Both of these companies have seen volumes pick up as of late. However, there's fear that rising mortgage rates could put a damper on that growth.

One bank stock that's likely to survive and thrive in this market is identified in our recent free report: "The Stock Buffett Wishes He Could Buy." The free report details why Warren Buffett is heavily invested in banks right now, and exactly why he can't buy one of the most attractive companies in that sector. Click here to keep reading. 

Read/Post Comments (1) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 10, 2013, at 12:43 PM, fingerlakes54 wrote:

    Mortgage applications down 20%? That makes sense to me and I live in the boonies. With the credit reporting agencies giving most folks a thumbs down for credit -people have just decided to not waste their time applying. The credit agencies must be in a dream world--like the crash of 2008-2009 never happened. There is no wiggle room for folks who are trying to recover from a collapsed economy. Also when you review your credit report--you can always find mistakes--sometimes big ones. Housing can recover as soon as bankers and credit agencies learn to lighten up.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2530258, ~/Articles/ArticleHandler.aspx, 9/25/2016 1:47:14 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:02 PM
DHI $30.18 Down -0.43 -1.40%
D.R. Horton CAPS Rating: ***
JPM $67.25 Down -0.14 -0.21%
JPMorgan Chase CAPS Rating: ****
PHM $19.81 Down -0.05 -0.25%
PulteGroup CAPS Rating: ***
WFC $45.74 Up +0.02 +0.04%
Wells Fargo CAPS Rating: ****