Home loan demand falls

Source: Construction Digital

Date :03/10/2007 10:25:45

U.S. mortgage applications have fallen for a second straight week.

The National Association of Realtors said its index of pending sales fell 6.5 percent in August to 85.5 as would-be homebuyers had difficulty obtaining mortgages from cautious lenders.

This was the lowest reading since records began in January 2001, down 21.5 percent from a year ago.

With defaults rising among borrowers with weak credit, lenders have backed off from all but the safest mortgages.

Turmoil

The US housing market has faltered over the past year in the face of higher interest rates, which have caused home repossessions to soar.

The sub-prime mortgage market, which specializes in offering high-interest loans to low-income or higher-risk borrowers, has also all but collapsed and exposure to such high-risk loans has created turmoil in financial markets worldwide.

This has led to banks having to bail out a number of sub-prime lenders.

The housing meltdown has led to the loss of many Wall Street jobs.

Yesterday Morgan Stanley announced the loss of 600 jobs to offset its losses in the crisis over poor mortgages that flooded the industry for five years.

October 3 2007