Summary
We are clearly at the trough of this cycle. Except for some speed bumps ahead which will all be different in size and lenght we have some time before we see a ramp up. Consumer skepticism in the existing and new housing market still dominated by consumer fears of job stabiity and housing prices.
Analysis
New or existing home mortgage applications have shown some upward variations primarily in the refinance market and little in the new housing segment but that these slight variations been caused by the recent record low mortgage rates coupled with the new low housing values across the country. These rates even though the lowest in some time have still not started a cascade of loan volume. We are in the flat tough of this cycle. Using the analogy of the road it is fair to say that while we can see down the road, we know that there are more speed bumps and potholes that are coming up. So instead of driving 55 and being unconcerned about what may be ahead if us, we are moving at a very slow 20 miles an hour so that when the next speed bump or pothole comes up we can either slow down or speed up depending on the size and shape of what is coming. The concern of causing further damage to the car by speeding over them is now more critical than the speed bumps themselves. We will continue to slowly move along the flat highway of this credit cycle until the speed bumps lessen and become infrequent. Based on current conventional wisdom this caution will continue until the beginning of next year unless something radical happens.What is driving the current behavior is "fear" and uncertainty. Fear is a powerful motivator in everyday Americans minds. We are still wondering about our jobs. Will we keep them? Am I as safe as I think? Do I want to move based on the uncertainty of this current cycle? Fear can also be a motivator. Fear can make you take action that could lower your risk through consolidation of debt which would be a great scenario to be in. Fear is also the great level in all things. That flight or flee instinct is second nature to us. In order to spur the housing markets and set in motion a steady increase in new or existing mortgage volume we need to move forward. We need to see that "Fear" sometimes is a phantom. As we see continued stability in the banks and mortgage companies out there, we all move forward. Slowly. As in all things good news and positive comments can drive the economy. If Washington and the banking community can work together to present a balanced and fair assessment of the markets, consumer skepticism or "Fear" will slowly fall by the wayside as it always does. The big question is when and will YOU let fear drive you or will you drive fear out of your mindset?
