Demand for home loans in the US plunged during the first quarter of 2014 as homeowners pulled back from mortgages due to increase in mortgage lending rates.
A report by Inside Mortgage Finance cited in The Wall Street Journal said that lenders originated $235bn in mortgage loans during the January-March quarter, a decline of 58% from the same period a year ago, and down 23% from the fourth quarter of 2013.
Go deeper with GlobalData
The increase in mortgage rates has also smashed housing refinancing activities, which plummeted by 75% during the first quarter from the year-earlier period.
Decrease in refinancing was the major contributor in the decline in mortgage lending last quarter, while loans for home purchases were basically flat from a year earlier and down from the fourth quarter.
A speech by the Boston Fed president was cited by the publication, "A strong housing rebound is an important component of most forecasts that suggest that GDP growth will be stronger than the economy’s ‘potential’ rate over the next two years."
It is believed that the slowdown in mortgage market prevails; it may ultimately derail the US Federal Reserve efforts to use easy-money policies to support the economic recovery.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData
