According to the Mortgage Bankers Association, total mortgage application volume decreased 1.7 percent last week, leaving volume was 15 percent lower that a year ago. We had hoped that the drop in mortgage rates should have given a little life to the mortgage business, but it did not.
The weekending is aggravating potential home-buyers, and it is taking a real chunk out of the mortgage market. Total mortgage application volume decreased last week and was 15 percent lower than a year ago, according to the MBA’s seasonally adjusted report.
Contract interest rates for 30-year fixed-rate mortgages with conforming loan balances under $453k decreased to 4.78 percent from 4.81 percent which is the lowest rate since the week ending July 20, with points increasing to 0.46 from 0.42 (including the origination fee) for loans with a 20 percent down payment. Buyer Applications to refinance a home loan, which usually see higher rates, decreased 3 percent from last week. Volume was 33 percent lower annually, as interest rates were considerably lower last year.
The big problem is home prices. Buyers simply can’t afford the competition in the market, so they are pulling back. Home prices are still rising, but the pace has slowed in the last few months as some sellers sit on the market longer. Yet prices are nowhere near falling on a national scale and are unlikely to, given the strong housing demand.
Home value appreciation has slowed, but it’s still triple its historic pace and three times the rate of wage growth. It’s still a seller’s market and will continue to be, unless there is dramatic shift in inventory or dramatic shift in interest rates.