Mortgage Applications Down – This May Be An Irrelevant Statistic

Econintersect reports the Mortgage Bankers Association (MBA) mortgage applications survey weekly.  The relevance of this survey is questionable.  For well over a year, this survey’s trend lines have disconnected with with the reports from both new and existing home sales.

This reporting week it was down 5.5%.

The overlay on the CalculatedRisk graph shows that while mortgage applications have been falling off a cliff – the numbers of existing home sales have been stable, or even slightly increasing.

The answer lies in a Zillow graphic – it is the buyers bringing cash.

There are anecdotal tales of Chinese, Ozzie, Kiwi, Canadian and European buyers bringing cash to buy houses (as they would likely not be able to be able to establish credit for a mortgage).  Google “home cash buyer news” and see a cascade of reports from across the country of the large rise in cash purchases.

Econintersect will continue to report the MBA mortgage application survey, but readers need to be aware that the data may not be as relevant as they think.