Mortgage Lending Fall to Lowest Level in 14 Years

The economy sees a demand for home loans plunge after unstable housing bubble.
3:00 | 04/25/14

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Transcript for Mortgage Lending Fall to Lowest Level in 14 Years
It's Friday morning at the markets are -- and today's big number fourteen. Mortgage lending in the United States fell to -- -- -- in fourteen years in the first quarter of this year. Everyone I'm Dan Cutler -- new York and talk about why that is happening Eric cast of finance joining us this Friday morning why -- they drop out home loans. That what I think is -- a few factors really first low rates are are about a hundred basis points or 1% higher today and thirty year fixed rate -- a year ago. I'm -- so you know the job market is gotten better but still not hurry so -- -- on the job beyond buying a house. There's a lot less credit available. And in during the boom literally Avery could fog a mirror to get a mortgage now it's much harder -- you -- you we've gone back to more traditional. Lending practices where he -- 40% down payment a lot of people this -- that. And finally psychologically there's a lot of people after the housing -- -- -- -- you know what I don't wanna buy a house so there's less demand. Out -- than before so I think all of those things together conspired to really put it be crimp on mortgage lending. What here's the comparable to that last -- -- get a thirty year fixed average three point 6% last week. Up at four and half percent and it really -- -- putting out that's really consulates all these driving forces. It is and I mean I think it's it's clearly had a major impact in the refinancing market. -- -- it I think a lot of people -- refinanced last year if they were able to you you know with a three handle on their mortgage and they feel great about it. -- half percent for thirty year fixed is still very cheap historically speaking so I think if your new home buyer. That number shouldn't hold me back from buying a house that you think than those other factors come into play you know what's your job situation what kind of a down payment -- you have and how much do you really want to buy this house because I think we've all learned that by the way you can this -- real estate to. I'm and it was a very painful lesson for a lot of Americans and this obviously gonna have a ripple effect as well -- -- new home construction. Yeah that's -- it's a really big impact on the economy New York Times that -- he's yesterday they basically said that. Housing is holding back the economy now that that may be a stretch but -- -- less home buying means less people spending money to first at home which means less money for construction. And -- of those jobs have really never come back to where they were there at the peak. And so it it has had a ripple effect in the broader economy and I think it's gonna remain. Probably a neutral. For the economy whereas the past couple years it was a big boost economic activity is -- -- have a couple really good years there. So let's also talk about fact that you know we obvious on the front lines have to deal with that at the same time the Fed has to digest this news Janet yeah on the Fed chair. Continue to taper off the bond buying program unemployment always a factor as far as -- -- revenue or and or 88 factor not the -- pivotal point though. In making those kinds of decisions but clearly this kind of an effect this kind of housing number this is gonna have an effect on their decisions going forward not. Today it will have -- affected their decisions and and they want to housing market to be strong. And but they don't wanna go back to the the boom years where it was clearly a bubble in housing rights and they're trying to navigate that balance. They're also concerned frankly about the banks because mortgage lending is of being source of profits for banks and it's down. Sharply which you'd expect given these numbers you know -- things -- a fourteen year low that's not good if your mortgage bank. So that's a factor for them as well I do you think right now their main focus for the primary focus. Is on the job market and again. If if I'm Jenny on to -- the Fed I'm looking at a four and a half percent thirty year fixed rate on saying OK it's not as cheap as it was but it still looks pretty good relative to the past. Forty years so she's not too worried about that number right. -- -- task for Yahoo! finance on this Friday morning -- thank you have a good weekend of course. Nutrient and you can -- with the latest headlines right here. Is dot com -- -- that number down Cutler.

This transcript has been automatically generated and may not be 100% accurate.

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