Mortgage Applications Rebound Amid Possible Bottom-Fishing: Report
Mortgage applications jumped back upward last week, reversing a sharp downward trend, according to data published Monday by Mortgage Maxx LLC. The so-called MAX index provided by the firm saw application activity jump 8.8 percent for the week ended June 6, while a sub-index tracking California applications jumped 11.3 percent. The MAX has traditionally been used by Wall Street prepayment researchers, by virtue of the face that Mortgage Maxx corrects for multiple application activity in reporting its numbers. The Max application index was introduced in April 2006 as a complement to the company's monthly prepayment projections based on title searches, loan application surveys and other data sources. "Anecdotes abound that bottom fishers are moving in on stranded homeowners, possibly providing significant demand," said Paul Descloux, publisher of the MAC. The National Association of Realtors, for example, reported on Monday that pending application activity had surged in May; some industry insiders speculated that the increase was tied to a jump in available REO inventory in key housing markets. Depite the application jump, the most current reading yet represents the third-worst week of application activity this year -- illustrating just how far applications have fallen in recent weeks. "With a non-existent refi-arbitrage and discouraging qualifying impediments, mortgage applications [are likely] to remain under severe pressure," Descloux said. "Foreclosure sales are now a significant portion of once pristine home sales, as available inventory still swells." The four-week moving average of the MAX application index has been steadily declining, and is now over 30 percent below its 2008 high, recorded in February.