A new set of strongly pro-consumer mortgage regulations went into effect October 3rd and the immediate result was that loan applications instantly dried up. Figures from the Mortgage Bankers Association show that for the week ending October 9th, overall loan application activity decreased 27.6 percent from the prior week.

Is there any connection between the new rules and fewer loans?

Those who are against the new regulations naturally believe that the rule change by and of itself is a blight on the mortgage lending system and will surely make it more difficult for borrowers to get the financing they need. Moreover, the application slide must also mean that lenders are not prepared for the new regulation and therefore the new rules should not be enforced at this time.

Mortgages & Timing

In fact, the evidence shows that the loan application fall-off was entirely normal and natural and not to be unexpected. For instance, MBA reports that “the unadjusted Purchase Index decreased 34 percent compared with the previous week and was 1 percent lower than the same week one year ago.” In other words, not a big deal.

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