Mortgage demand from homebuyers has plummeted

There is an “Open House” sign in the front yard of a house for sale in Columbus, Ohio.

Tai Wright | Bloomberg | Getty Images

The surprising surge in home purchases brought about by the coronavirus pandemic may finally be mitigated. Mortgage rates remain near record lows, but buyers are experiencing a sticker shock in today’s overheated housing market.

Mortgage applications for home purchases fell 0.8% in the two weeks leading up to January 1 compared to the second week of December, according to the Seasonally Adjusted Mortgage Bankers Association for Christmas and New Year holidays. ..

What’s more, purchases were only 3% higher than in the year-ago quarter. Annual comparisons over the past few months have shown that purchases have increased by more than 20% year-on-year. Obviously the buyer is withdrawing.

Home prices are rising more and more rapidly, and even with record low mortgage rates, it can put more and more buyers aside.

At the end of the year, the average contract interest rate for 30-year fixed rate mortgages (under $ 510,400) with matching loan balances fell from 2.90% to 2.86%. Loan points with a 20% down payment increased from 0.31 (including origination fees) to 0.35. Mortgage demand from buyers receded in the last two weeks of 2020, probably due to soaring prices.

Joel Kang, MBA’s Vice President of Economics, said: “The record low interest rates on fixed rate mortgages are good news for borrowers looking to refinance or buy a home. Industry forecast.

Still, mortgage refinancing applications were down 6% from two weeks ago. They were 100% higher than the same week a year ago. Mortgage rates at the end of 2019 were above the full percentage points.

Most analysts do not expect mortgage rates to rise significantly in 2021 as the Federal Reserve continues to fund the mortgage market. Prices started this week in line with the latest minimum record. Of course, given the US Senate’s final vote in Georgia this week and Friday’s monthly employment report, there is great potential for movement in either direction.

Mortgage demand from homebuyers has plummeted

Source link Mortgage demand from homebuyers has plummeted

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