Mortgage Purchase Applications Near 21st Century Lows As Q.E. Ends

Lets be honest here.

Why are mortgage purchase applications near 21st century lows with rates  near 4% and homeownership rates at a 19 year low, a number which is artificially high because it includes  delinquent homeowners. There are still 3 million loans in delinquency which means we will have a lot more future renters coming on-line.

An overview of these metrics for the past 20 years illustrates the real story for housing:

– Real Median Income
– Employment to Population Ratio
– Average Wage Growth Year over Year
– Mortgage Purchase Applications
– U.S. Homeownership Rates

From Professor Anthony Sanders

This economic cycle has seen great demand from cash buyers, renters and rental
construction. However, mortgage demand from main street has been sleepy.


We have lower rates in 2014, higher inventory and rising rents and still demand shows no growth.

Still think lending is too tight?  Advocates of the “tight lending’ theory lack a financial lending background. We can clearly see that main street America needs to make more money to have the capacity to own the debt of a home. We don’t need to ease lending standards, Americans need a raise.

As QE is over today we can  also take joy that those crazy home loans are deep in the economic grave as well.  That’s a good thing.  Residential lending is based on debt-to-income ratios and availability of liquid assets — which means now people have to make money in order to get a loan! Disability payouts and food stamp are on the rise in this country and we are looking for a housing recovery from main street? Tsk Tsk.

The “saving grace” for housing in this cycle  is that we have  the rich, both foreign and domestic, buying homes with cash.  If  the rich weren’t buy homes with cash at 20% above historical norms, then sales would be down -13% to -17% year over year.

When asked to give an opinion as to why Warren Buffet is terribly confused by the low housing demand when rates are so low; my answer:  It’s not rocket science, it’s simply math.
My Q&A with

Logan Mohtashami is a senior loan officer at AMC Lending Group, which has been providing mortgage services for California residents since 1988. Logan is also a financial contributor for