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Us. Excess Liquidity Being Removed Quickly.

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NEW YORK (Reuters) - U.S. mortgage applications fell for a second consecutive week, led by a decline in home purchase loans, as interest rates hit their highest levels since early December, an industry trade group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended February 3 decreased 1.2 percent to 619.3 from the previous week's 626.8.

The MBA's seasonally adjusted purchase mortgage index fell 2.4 percent to 425.1 from the previous week's 435.7. The index is considered a timely gauge on U.S. home sales.


More bad news for property.

Now we have to start monitoring these things weekly!!! As they say, up the stairs and out the window!

Edited by karhu

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The real news here is rising overnight (read short term) rates.

Traditional american mortgages were 15 or 30yr fixed rates, at rates determined by the 10yr and 30yr US treasuries.

In the past 5 years there has been a rush to adjustable rate mortgages (ARM), since short term fed rates were ultra low. Often these mortgages adjust after the first 2-3 years, during which time they are fixed at a very low rate. Buyers used ultra low rates to take loans of half a million or more, banking on price appreciation, or the ability to refinance to another low-start mortgage when the current mortgage adjusts.

Now that a 30yr fixed and an ARM have almost the same rate watch for carnage when the ARMs start to adjust and people realise that their payments will double and there are no inexpensive ARMs to refinance into.

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