Thursday, June 5, 2008

Show Me the Money

Fox Business

Did you see this this morning? My friend Peter Boockvar from Miller Tabak sent it to me this morning.

Mortgage applications fell 15.3% led by a 25.7% decline in refinancing, which fell to the lowest since Aug 2006. Purchases fell 5.4% to its lowest level since February 2003. The rise in mortgage rates was the main catalyst as the average rate on a 30-year-fixed mortgage rose to 6.17% from 5.96% last week.

These are unbelievably disappointing numbers!!!!
This is what gets me hot under the collar. Banks are borrowing money at record rates from the FED and the Term Auction Facilities and yet they’re taking that cash and using it to shore up their books. What about using it for the consumer, for us? We need the money. We can’t find funding. We can’t find people to refinance our mortgages. Isn’t that what we need to turn housing around?

Shortly after the mortgage application numbers and Hovnanian quarterly numbers were released this morning, I talked to Karl Case, the co-Founder of the S&P Case/Schiller Home Price Index and Daniel Shaffer, a CPA and president & COO of Shaffer Asset Management about how we can turn the inventory picture around and bring some life back to the housing market. Look at what they both had to say about where we are in the housing downturn in the context of a nine-inning ball game :)!

There ARE qualified people that would like to buy a home but can't find funding because the banks have made it impossible. The FED lowered rates so the banks would fund more mortgages but the banks are reneging on the deal!

This is the second year my house has been on the market as I watch homes prices plummet. I have had people who wanted to buy but could not get financing or wanted to buy but could not sell their home for the same reason.

Now I am no expert on financial transactions and the conditions on which money is lend by the Feds. However it would seem if the major reason money was being lend was to fund mortgages then shouldn't banks be doing that??! In addition, it would seem to me that in order for banks to receive money from the Fed at a lower rate that they would have to show that a percentage of that money had went to mortgages?

Anyone reading who has expertise in this area please comment

No comments: