Mortgages down to eight-year low

Dark economic days indeed.

From the link:

Mortgage bankers originated just $333 billion in one-to-four family loans in the third quarter, the industry’s worst showing since the fourth quarter of 2000, according to exclusive survey figures compiled by National Mortgage News and the Quarterly Data Report.

Compared to the same quarter a year ago, originations plunged 45%. Based on the third-quarter run-rate, just $1.33 trillion of home mortgages might be originated next year.

If so, it would be the industry’s second weakest year of the decade. The only immediate glimmer of hope for lenders is the prospect of future rate cuts by the Federal Reserve and bargain hunting in the foreclosure market, especially in California where in some neighborhoods prices have declined by as much as 50% from their peaks.

Richard Wilkes, the former head of Sears Mortgage and other shops, is predicting that the industry, and nation at large, is facing what he called the “nightmare of stagflation.”

He noted, “We saw this phenomenon in the late ’70s and early ’80s when we had a recession accompanied by prime rates as high as 21%.”