In the first quarter of 2009, the U.S. gross domestic product shrank almost as much as it did in the fourth quarter of 2008, according to a government report today.  The drop was much worse than expected.  According to economists surveyed by Briefing.com, expectations were for a drop of 4.7% in gross domestic product, but the actual drop turned out to be 6.1% — the biggest drop in 26 years.  The two major influences are businesses pullbacks in spending, accounting for 2.6 percentage points of the overall decline in GDP; and inventory reduction during the quarter, which contributed another 2.8 percentage points to the drop in GDP.  State and local governments also cut back on spending.

Mortgage loan application volume down 18.1%

The Mortgage Bankers Association (MBA) announced that the Market Composite Index, a measure of mortgage loan application volume, decreased 18.1 percent on a seasonally adjusted basis to 960.6 from 1172.2 a week earlier.  On an unadjusted basis, the Index decreased 17.4 percent compared with the previous week and increased 62.7 percent compared with the same week one year earlier.  The refinance share of mortgage activity decreased to 75.3 percent of total applications from 79.7 percent the previous week, and the adjustable-rate mortgage (ARM) share of activity increased to 2.1 percent from 1.4 percent from the previous week.

Home ownership declines

According to the US Department of Commerce Census Bureau, the rate of U.S. homeownership slipped in the first quarter to the lowest level since the start of the decade.  U.S. homeownership dropped to 67.5 percent from 68 percent a year earlier, driven by a sharp decline among younger buyers as well as among African-American households.  Today, 74.7% of adult whites own their homes, and blacks are the smallest segment of mortgage borrowers, with only 46.1% of the population currently owning their home.  Hispanics followed at 48.6%, with “all other races” experiencing a homeownership rate of 57.4%.