Mortgage Applications at Six Year Low

In another grim reminder of the struggling real estate market and the recession of 2008, the Mortgage Bankers Association of America released a report Wednesday the puts mortgage applications at six year lows.

A sharp decline in refinancing of homes is partly to blame, as those applications dropped 1.5 percent from the previous week. All total, application volume is down 61 percent from its 2008 peak in February.

Applications fell despite a drop in interest rates. A 30-year fixed-rate mortgage fell to 6.47 percent from the week ending Aug. 15 from 6.57 percent just the week before.

This report comes on the heels of Commerce Dept. report released Tuesday that said that construction of new homes has reached the lowest point in 17 years.

Analysts say that these most recent problem in the housing market stem mainly from the higher cost of borrowing, tightening lending standards by banks and other creditors and plummeting property values.

More broadly though, it is symptomatic of the failed economic policies that have pushed the U.S. economy to the brink of ruin. All-time low personal savings rates have been offset by increasing real estate values and an artifically inflated dollar propped up by foreign investors. When the housing bubble burst just recently the fallacy of these policies became apparent as financial giants such as Bear Stearns, Freddie Mac and Fannie Mae began to experience catastrophic losses of capital.

Source CNNMoney.com:

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