It’s become clear that the market has struggled this spring – a disappointment to all of us in the RE industry – but as we near summer, it’s become apparent that some improvements have been made. While affordability has been a killer for many would be buyers, mortgage rates have been improving for those trying to buy or refinance a home – to an astonishing 12 month low – giving us hope that the market is about to improve. Unfortunately, a new study suggests that these reduced rates have not been the catalyst needed to jumpstart the market, leaving many to wonder what is holding these buyers back.
According to a recent study performed by the Mortgage Bankers Association, mortgage applications decreased by 3.1% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 14% compared with the previous week. Similarly, the Refinance Index dropped 3% from the week before.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.22% from 4.23%, with points decreasing to 0.11 from 0.16 (including the origination fee) for 80% LTV loans. Similarly, the average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.99% from 4.04%, with points decreasing to -0.46 from -0.45 (including the origination fee) for 80% LTV loans.
“Despite interest rates being near 12 month lows, the path to homeownership has been on hold for many potential buyers because of the lack of home inventory,” said Quicken Loans vice president Bill Banfield. “Even though the positive trend of rising home prices persists, many homeowners are still waiting to sell. The recovery will stay largely paused until homeowners gain confidence in the market and decide to list their home.”
Do you think declining interest rates and increasing prices are enough to bring more buyers and sellers to the market come summer? What are your thoughts?
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