Mortgage applications fall, home remodeling projects up

07.04.09
By Nicholas Storie

Many point to the subprime mortgage meltdown as a trigger for the ongoing financial crisis. But since the onset of the recession - dated to December 2007 - the housing crisis has grown worse and businesses and consumers have faced a credit crunch.

More recently, signs have been pointing to a potential end of the massive declines in employment and the stock market as well as a bottoming out of the housing market.

Consumers are taking steps to curb their credit card debt, improve their credit scores and put money away for rainy day funds.

With home prices so low, individuals and couples in good financial standing have been able to use their solid credit histories to obtain affordable mortgage loans and buy a home. First-time buyers have used extra incentives from the government to buy property.

But news this week from the Mortgage Bankers Association says that mortgage loan application volume was down by almost 19 percent on a seasonally adjusted basis compared to one week earlier.

Fewer people are considering refinancing as well. The MBA says that its Refinance Index decreased by 30 percent compared to last week.

With consumers shying away from buying new real estate and others worried about selling their own home in a still volatile market, many are instead opting to remodel their existing properties.

Consumer Reports says that over the next 12 months over half (54 percent) of homeowners surveyed are set to begin some type of remodeling project. In an effort to save money 65 percent plan to do some, if not all, of the work themselves.

Make a detailed plan and write out a budget, says Bob Markovich, senior home editor at Consumer Reports.

"The more homeowners know what they're getting into, the more money they'll save," he added.

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