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Mortgage applications hit highest level in 2 years? Not so fast.

Written By Brian Hicks

Posted December 12, 2007

Crafty headline writers and bullish housing “experts” hope you’ll just read “Mortgage applications hit highest level in 2 years”, and walk away thinking everything’s fine.

Surely, many of us that believe this to be true are headline-only readers. But it’s nothing more than an overzealous effort to persuade public opinion, and instill false reality in the American psyche.

Unfortunately, housing positives die in the headline, leaving naïve headline-only readers to believe everything’s fine.

The reality – “The trade group’s index continues to be skewed by borrowers filing numerous applications in the hopes of getting one approved, analysts contend.”

“Buyers out there are scared about their mortgage applications being turned down, and anecdotes show they are actually applying for more mortgages with more companies,” Steve Wyatt, a professor of finance at the Farmer School of Business at Miami University said on Tuesday prior to the release of the MBA report.”

And, “Higher applications are not necessarily as indicative of demand as they might have been before,” and have not been translating to higher sales, he said.”