Mortgage demand decreases even as rates decline

Mortgage demand decreases even as rates decline

July 7, 2022: -Mortgage rates declined for the second week in a row, but that didn’t revive demand from homeowners or potential buyers.

In the previous week, rates decreased ten basis points and have declined 24 basis points in the previous two weeks. Still, total mortgage demand dropped 5.4% from one week ago, according to data from the Mortgage Bankers Association. These results include a holiday adjustment for early closings on the Friday before Independence Day in this week.

The contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreases to 5.74% from 5.84%, with points increasing to 0.65 from 0.64, including the origination fee, for loans with a 20% down payment.

“Mortgage rates are decreasing for the second week in a row, as growing concerns over an economic slowdown and increased recessionary risks kept Treasury products lower,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

Those concerns showed up in applications to refinance a home loan, which dropped 8% for the week and were down 78% from the same week one year ago. The refinance share of mortgage activity decreased to 29.6% of total applications from 30.3% the previous week.

Home purchase applications decreased for the week and the year down 4% and 17%, respectively.

“Rates are significantly higher than they were a year ago, which is why applications for home purchases and refinances remain depressed. Ongoing affordability challenges and low inventory hamstring purchase activity” said Kan.

Realtor.com published its June housing report the previous week, which showed for-sale inventory recovering, increasing at its fastest yearly pace of all time, up 18.7% year by year. Therefore, 53.2% lesser homes are always sold compared with June 2019.

“Our June data shows the inventory recovery accelerated, posting the second straight month of active listings growth in nearly three years. We expect these improvements to continue,” said Danielle Hale, chief economist at Realtor.com, but she counted, “The typical buyer has yet to see significant relief from quickly marketing homes and record-high asking prices.”

According to the Mortgage Bankers Association, the average home purchase loan size is $405,200, down from $413,500 for the week ended June 24.

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Mortgage demand decreases even as rates decline
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Mortgage demand decreases even as rates decline
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Mortgage rates declined for the second week in a row, but that didn’t revive demand from homeowners or potential buyers.
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The Women Leaders
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