Should Mortgage Lenders Fear the Fiscal Cliff?

Is all the talk about an economic ‘fiscal cliff’ spooking mortgage applicants? That’s hard to say – though loan applications have been down the past two weeks after spiking 16%. U.S. Bancorp CEO Richard Davis told analysts the other day that his customers are feeling “less comfortable.” But borrowers are also blessed with the lowest mortgage rates in history and a fear – thanks to constant media reporting – that home prices may soon rise dramatically because all the so-called ‘shadow inventory’ is being sucked up by speculators, repaired and flipped. (Home flipping is the subject of at least one reality show on cable TV.) So, now applicants face this dilemma: wait until the smoke clears on the fiscal cliff issue or jump into the mortgage pool before rates and home values rise. At least one lending niche should not suffer: refinancings.

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Comments (2)

I believe that since our housing market is gradually recovering and we see starting constructions every now and then, price are going to grow for housing. This is of course very unfortunate now when we such so low interest rate. And it is easy to understand that people do not want to take out loans until situation is going to stabilize for good. But time will pass a little and there will be more applicants, since awe all need homes for our families

Posted by Anonymous | Tuesday, October 23 2012 at 6:29AM ET

It's terrible that our biggest market force - home ownership has turned into a game to make rich richer. Those who can afford to buy up homes without by taking advantage of low interest loans and flip them for a profit will come out on top while the economy suffers in the next wave of housing rises and eventual bust. I guess there's no real way of stopping it though. When prices go down, someone is there to buy up real estate, and sell at a profit later when they're up.

Posted by Steven | Wednesday, December 12 2012 at 12:42PM ET

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