I’m not going to write about the mortgage market anymore (after this that is.) I’m not really interested in the mortgage market, I’m only interested in the marketing. I write about mortgages so much because mortgage lead gen and new car lead gen were the canaries in the coal mine for online lead generation and they remain the two most mature lead gen verticals.
That said, something about the reporting on the subprime mortgage market jitters kept bothering me. Holders of mortgage debt are having financial problems because some of that debt looks to be going bad. But what does this have to do with the underlying business of mortgage lending?
Here is some data on mortgage applications from the Mortgage Bankers Association. First, applications for purchase mortgages:
Note that the y-axis is clipped, showing 90 to 130 of this seasonally adjusted index (week of 1/2/2003 equals 100.) You’ll notice that purchase mortgage applications peaked about two years ago, bottomed out a year ago and have been generally climbing since.
There does not seem to be a link between people defaulting on their subprime mortgages and mortgage applications, these two things are probably mostly disjoint.
My point is that mortgage originators are not having any trouble finding customers today that they didn’t have in the first half of the year: there are just as many–if not more–applications. Lenders may not be accepting as many applications as they were, but the “end-customer pool” does not seem to be “drying up”, as claimed in this Barron’s article.