The US Mortgage Market Experiencing Great Slowdown

The market for mortgages has just experienced its worst first quarter since 2000. The clear indications from the Federal Reserve that it will soon stop the programs for supporting the economy and for keeping interest rates down have had a major impact on the market in the first quarter of 2014. The situation is much worse even compared to the period of the housing market crisis when many people refinanced and the demand for home loans was fairly steady.

In the first quarter of 2014, the mortgage origination volume was $192 billion. For comparison, during the first quarter of 2013 it exceeded $450 billion. The annual decrease is some 60%. The drop on a quarterly basis is also significant. The home loan origination volume fell 26% from the fourth quarter of 2013 to the first quarter of 2014.

The market performance during the first quarter of 2014 is the worst since the beginning of the new millennium. In the first quarter of 2000, the mortgage volume was just over $100 billion. In the first quarter of 2001, it exceeded $200 billion. It fluctuated around $300 billion during the first quarters of 2008, 2009 and 2010.

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The average mortgage interest rate has increased with approximately 1% from the beginning of 2013 to the beginning of 2014. However, this has led to a massive drop in the home loan origination volume. This is primarily due to the sharp drop in refinancing. Additionally, as the housing market is recovering and the property prices are increasing, owning a home becomes impossible for many people who would generally want to buy a house. The stricter rules for mortgage approval have also played their role for the drop in the origination volume, even though their impact is not that significant.

The forecasts for the rest of 2014 are not optimistic for lenders. They are trying to make their mortgages more attractive by offering deals with low down payment and by lowering their credit score requirements.

Christian

Christian

Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info
Christian

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