Mortgage applications are dropping, that is slowing down, thanks to several factors that are making borrowing for a home less attractive. First, mortgage interest rates moved up a bit in the past week, causing some to think that perhaps the great deals are over. Even refinancing demand dropped as people began re-evaluating their situations and the interest rates became less attractive.

Second, especially for purchases, the first time home buyer tax credit still has not been extended. Though there are rumors that a deal may get struck in congress we all just have to play the wait and see game. It’s fairly obvious that if you haven’t already started the paperwork by now, you probably won’t close in time for the deadline based on lender turn times and the various appraisals and inspections. Even just changing things so that paperwork initiated by the November 30 deadline would probably help home sales. If it does not get extended I would expect further slowdown for a period of time as inventory still need to get worked off.



Third, credit requirements continue to tighten as Banks try and shore up their balance sheets and have little appetite for risk. As credit tightens, fewer and fewer borrowers will be in a position to qualify. Less buyers = less sales or Lower demand = lower prices