Florida Mortgage Applications Fall For Week

Applications for purchase-oriented and refinance Florida home loans fell last week, an industry trade group said Wednesday in the latest sign that housing remains mired in a slump.

Statewide, Florida home mortgage application activity slid 3.4 percent to a seasonally adjusted 643.7 in the week ending June 15, the Mortgage Bankers Association reports in its weekly survey.

The drop in Florida mortgage applications piled on to several negative reports this week.

Data from home builders and the federal government this week suggests that any sustained housing market rebound could be next year’s business.

Housing starts fell more than 2 percent in May as builders grappled with a stockpile of unsold homes, the Commerce Department said Tuesday.

Sentiment among home builders sank to its weakest level this month in more than a decade and a half, based on an index reported Monday by the National Association of Home Builders.

The group expects that with the recent Florida mortgage woes, building and sales will keep eroding until late this year before starting to recover in 2008.

On Wednesday, the seasonally adjusted purchase index fell 3.0 percent to 450.9 while Florida refinance applications index shed 4.2 percent to 1,776.8 on a seasonally adjusted basis.

Thirty-year mortgage rates dipped 0.01 percent last week to 6.60 percent. Average 30-year mortgage rates last hovered in this area in July 2006.

Last week, the MBA reported that Florida and U.S. homeowners started the foreclosure process at a record pace in the last three months.

THE BAD CREDIT FLORIDA MORTGAGE IMPACT

Among the bigger problems were subprime adjustable-rate mortgages in some of the markets that had been the hottest during the five-year record home price and sales spree earlier this decade.

Riskier borrowers of bad credit Florida mortgages are increasingly being pushed into the foreclosure process as their adjustable loans reset at much higher rates, boosting payments beyond reach.

In Tuesday, Dallas Federal Reserve economist John Duca cautioned that the housing slump could be prolonged by lenders cutting back loans to subprime borrowers, or those with blemished credit histories.

Many Florida mortgage brokers and lenders have quickly become more restrictive in response to the mounting late payments and foreclosures.

As a result, more mortgage applications are being rejected, and builders worry that rising mortgage rates will weaken demand for homes already pressured by tighter Florida home loan practices.

SOURCE: Reuters